DeFi
Is Hong Kong the next big thing in crypto? DeFi and Metaverse plans revealed
Is Hong Kong the next big thing in crypto?
Hong Kong is positioning itself as a leader in the global fintech landscape with a focus on crypto-related sectors such as decentralized finance (DeFi) and the Metaverse.
Recently supported by the government studies Studies conducted by the Hong Kong Institute of Monetary and Financial Research (HKIMR), part of the Hong Kong Academy of Finance (AoF), have highlighted the importance of these digital frontiers in shaping the future of finance in Hong Kong.
The reports released on June 25 analyze the impact and potential of DeFi and Metaverse technologies, highlighting their rapid growth and emerging opportunities.
Hong Kong’s push into DeFi and the metaverse
Research on DeFi has revealed a notable increase in market capitalization, from $6 billion in 2021 to over $80 billion in 2023, signaling an expansion that highlights the sector’s potential.
Although DeFi represents only 4% of the overall cryptoasset market, it remains largely untapped, with around 71% of crypto companies surveyed in Hong Kong yet to explore this avenue.
The report remains optimistic about DeFi’s capabilities to “reengineer” financial services with innovations such as “liquid staking, flash loans, and automated market makers,” promising reduced transaction times and increased financial inclusion.
At the same time, the study on the Metaverse reveals that if local financial institutions have shown great interest, their commitment remains moderate.
However, more than half of those surveyed expressed skepticism about the potential of the Metaverse, a sentiment that does not reflect that of some Hong Kong fintech companies. proactive attitude.
These companies are actively pursuing Metaverse-related developments, exploring how virtual environments can play a central role in financial services.
Enoch Fung, CEO of AoF and Executive Director of HKIMR, highlighted the intertwined nature of DeFi, Metaverse and broader Web3 technologies as crucial to the future of Hong Kong’s financial services sector. Fung particularly noted:
Emerging DeFi and metaverse technologies, which are closely linked to broader developments in virtual assets and Web3, will likely present various opportunities for the financial services sector in Hong Kong.
Upgrades to Crypto Hub cement status
Hong Kong’s broader strategy includes becoming a central hub of cryptocurrency innovation and activity. This intention is supported by recent regulatory milestones, such as the Hong Kong Securities and Futures Commission (SFC). grant initial approvals to 11 cryptocurrency exchanges.
This development is part of a larger effort to issue Virtual Asset Exchange Platform (VATP) licenses, which began in 2022 and aims to boost Hong Kong’s stature alongside major global crypto hubs like Singapore and Dubai.
Further fostering this environment, industry executives suggest that Hong Kong could soon introduce staking options for Ethereum spot exchange-traded funds (ETFs), thereby improving the attractiveness and functionality of crypto-based financial products in the region.
Featured image created with DALL-E, chart from TradingView