DeFi and Metaverse sectors are cited as top fintech innovation contributors in Hong Kong. Regardless of the obstacles, a report conducted by Hong Kong officials indicates the potential of DeFi and Metaverse to make new opportunities as a way to place the region at the forefront of the fintech industry.
Hong Kong Institute of Monetary and Financial Research (HKIMR) and Hong Kong’s Academy of Finance (AoF) have issued two reports. These reports were published on 25th June and detailed the role of DeFi and Metaverse in digital finance.
Hong Kong’s report on DeFi reported the growth of $6 billion sector in 2021 to $80 billion in 2023. The report indicated that the numbers demonstrated in the report about DeFi’s potential cannot be overlooked.
DeFi holds 4% of total digital asset market cap. The report indicates that the sector still harbors a relatively conservative trading volume. More than 70% of businesses in crypto have not ventured into the territory. The study has also indicated that the current problems associated with DeFi related to governance, vulnerabilities, and regulatory policies.
DeFi Industry as Center of Fintech Innovation in Hong Kong
The authorities in Hong Kong have conducted research and noted that investors are positive about the potential of DeFi to introduce financial solutions such as liquid staking, automated market makers, and instant loans etc. In this manner, the investors can leverage more innovation, automation, and ease of participation.
On the subject of Metaverse, Hong Kong officials have stated that local financial institutions have showed a moderate scale of participation despite high interest. However, 51% of potential investment sources are not betting on the metaverse.
This number comprises 6% from the metaverse services providers. Hong Kong fintech is following all the latest features added to metaverses. Enoch Fund, AoF CEO and executive director of HKIMR have also commented on the matter.
He noticed that DeFi is among the emerging technologies and metaverse. Both sectors are closely associated with virtual assets and Web 3.0 solutions and present various opportunities for the financial services sector of Hong Kong.
Hong Kong Hosts Crypto and Web 3.0 Summit in Toronto
An event was organized in Toronto, Canada hosted by the Hong Kong government. The event invited crypto and Web 3.0 firms hailing from Hong Kong to look for foreign investments.
Toronto ETO official noted that Canadian crypto and Web 3.0 firms can leverage lower taxes and friendly regulatory environment of Hong Kong to develop pre-commercial specialist firms.
Toronto ETO director Emily Mo also talked about the favorable regulatory environment and the cooperative stance of the Hong Kong government. She also stated that Web 3.0 and virtual asset developments are backed by the creative mindset. Fintech, healthcare, green solutions, and property solutions are some of the trending topics in Asian regions.
She also talked about Canadian businesses being able to opt for public or private funding in Hong Kong. Additionally, both nations have a double-tax agreement for the last 10 years. It means that businesses operating in both jurisdictions can avoid two-fold taxation pressure and leverage fiscal preservation on personal and corporate profits.
Johnny Ng Kit-Chong of the Legislative Council of Hong Kong confirmed the creation of sub-committee on Web 3.0 and Virtual Asset Development to highlight digital assets and Web 3.0 solutions in Hong Kong.
The council is collecting feedback on several aspects of Web 3.0 policies such as technical, legal, and regulatory frameworks for an organized environment in Web 3.0.
Hong Kong Crackdown Against Unregulated Digital Assets
On the other hand, the government of Hong Kong has also retained a stringent stance towards unregulated digital assets. On this account, the regulators have shut down all unlicensed cryptocurrency exchanges operating in the region in May.
The regulators received 20-plus applications for registration as a licensed cryptocurrency services provider. Hong Kong regulatory terms include Anti-money laundering and Counter-terrorist financing measures.
