Bitrabo Editorial
Hong Kong is carving a path as a frontrunner in the global financial technology sector, particularly in areas like decentralized finance (DeFi) and the Metaverse.
Recent research studies conducted by the Hong Kong Institute for Monetary and Financial Research (HKIMR) underline the significance of these digital realms in shaping Hong Kong’s financial future.
Released on June 25, the reports analyze the growth and opportunities presented by DeFi and Metaverse technologies.
Hong Kong’s Embrace of DeFi and the Metaverse
The research on DeFi indicates a substantial rise in market capitalization from $6 billion in 2021 to over $80 billion in 2023, hinting at significant growth potential in the sector.
Despite DeFi representing only 4% of the overall crypto-asset market, there is considerable untapped potential, with about 71% of surveyed crypto businesses in Hong Kong yet to explore this field.
The report is optimistic about DeFi’s ability to transform financial services through innovations like “liquid staking, flash loans, and automated market makers,” offering quicker transactions and enhanced financial inclusivity.
Concurrently, the study on the Metaverse reveals that while local financial institutions show interest, their involvement remains modest.
Despite over half of respondents expressing doubt about the Metaverse’s potential, Hong Kong fintech businesses are actively pursuing Metaverse-related initiatives to leverage virtual environments in financial services.
Enoch Fung, CEO of the AoF and executive director of HKIMR, stressed the intertwined nature of DeFi, the Metaverse, and broader Web3 technologies as vital for Hong Kong’s financial services industry’s future.
The emergence of DeFi and the metaverse, interconnected with virtual assets and Web3 advancements, is poised to bring diverse opportunities to Hong Kong’s financial services industry.
Advancing as a Crypto Hub
Hong Kong’s strategy includes establishing itself as a pivotal hub for cryptocurrency innovation and activities, supported by recent regulatory milestones like the approval of 11 cryptocurrency exchanges by the Hong Kong Securities and Futures Commission (SFC).
This effort forms part of the endeavor to issue virtual asset trading platform (VATP) licenses since 2022, aiming to boost Hong Kong’s position among premier global crypto hubs like Singapore and Dubai.
In furthering this ecosystem, industry leaders propose the potential introduction of staking options for spot Ethereum exchange-traded funds (ETFs) in Hong Kong, enhancing the region’s appeal and the functionality of crypto-based financial products.