Hong Kong's fintech development is getting a strong impetus as the special administrative region government rolled out a series of initiatives to turn it into a global hub for virtual asset investors at the start of this year’s high-profile FinTech Week on Monday.
The city issued a policy statement on the development of virtual assets in Hong Kong, saying it would establish a new licensing regime for virtual asset providers and launch pilot projects involving non-fungible token issuance, green bond tokenization, and an e-Hong Kong dollar.
"We want to make our policy stance clear to global markets, to demonstrate our determination to explore financial innovation together with the global, virtual-assets community,” Financial Secretary Paul Chan Mo-po said in his opening remarks at Fintech Week via a video recording.
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The Hong Kong Monetary Authority is also analyzing the feedback it received on the regulatory approach towards stablecoins and will ensure that it reflects international regulatory recommendations while responding to local circumstances, according to Chan, who was unable to attend the conference in person after contracting COVID-19 during a business trip to the Middle East.
We also ensure that consumers and investors understand the risks associated with investments in these still largely unregulated products.
Eddie Yue, Chief Executive, HKMA
The Secretary for Financial Services and the Treasury Christopher Hui Ching-yu told FinTech Week that the HKSAR government will allow retail investors to invest in virtual assets, and that the Securities and Futures Commission will be conducting a public consultation on the proposed changes.
The SFC will also study the possibility of having exchange-traded funds on virtual assets in the market, Hui said.
Addressing the same conference, Eddie Yue, chief executive of the HKMA, said the city’s de facto central bank is planning to issue the first batch of tokenized green bonds this year on a pilot scale. The scale is not expected to be large.
Yue also said in his opening keynote speech that the promotion of virtual assets will be complemented by a clear approach to money laundering, financial and other risks in a bid to benefit the public through achieving a fair balance between innovation and stability.
“We continuously work with banks to achieve this. We also ensure that consumers and investors understand the risks associated with investments in these still largely unregulated products,” Yue said.
“To do this, we need to put in place the right guardrails,” he said. “And the basic principle is very simple: same activities, same risks, same regulations, so that digital assets performing similar functions to traditional products should be subject to similar regulations.”
Themed “pushing boundaries, reaping benefits”, FinTech Week is the first among a string of mega-events to be hosted this week. The five-day fintech gathering is expected to attract 20,000 delegates and more than 3 million participants online from 80 economies.
The finance chief said Hong Kong’s fintech sector has seen impressive growth powered by the city’s strengths such as an open market, a rigorous regulatory regime, the rule of law, sophisticated infrastructure, and the free flow of capital and information.
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The number of fintech companies in Hong Kong has risen from 180 five years ago to more than 800 today. “Many of them are founded by overseas talents, from Israel, France, the United Kingdom and many other places. And we ought to be proud that our fintech sector also gave birth to a number of unicorns,” said Chan.
He noted that the “digital transformation of the financial services sector” is a central priority, citing a string of measures as driving forces in the digitalization process, including the rollout of the Commercial Data Interchange, the government’s subsidies to fintech companies and research bodies, pilot trials of cross-boundary fintech adoption, and preparatory work for issuing central bank digital currency.
Contact the writer at evanliu@chinadailyhk.com