DeFi
Hong Kong targets DeFi, metaverse for fintech expansion — TradingView News
Government-backed studies in Hong Kong have identified decentralized finance (DeFi) and metaverse technologies as new opportunities to strengthen the region’s dominance in the global fintech landscape.
The Hong Kong Institute of Monetary and Financial Research (HKIMR), the research arm of the Hong Kong Academy of Finance (AoF), released two reports on June 25, each detailing the implications of DeFi and the metaverse on the financial sector.
The Hong Kong DeFi report highlighted the explosive growth of the ecosystem, from a modest market capitalization of $6 billion in 2021 to over $80 billion in 2023. It added:
“These numbers demonstrate that the potential of DeFi cannot be ignored.”
DeFi, which represents 4% of the overall cryptoasset market, currently remains a largely untapped market. As shown below, over 70% of the crypto companies participating in the study had not yet explored this technology. Cointelegraph
Read Cointelegraph’s beginner’s guide to learn more about decentralized finance.
Harnessing the DeFi potential
The study highlighted existing issues in DeFi around governance, compliance, and vulnerabilities, but remained generally optimistic about its unique characteristics:
“DeFi has the potential to provide new financial services, such as liquid staking, flash loans and automated market makers, with reduced transaction speed and improved innovation, automation and financial inclusion. »
Regarding the metaverse, the Hong Kong study found that local financial institutions showed a moderate level of engagement despite their high interest in it. This result is consistent with the sentiment expressed by respondents in Hong Kong.
Mixed Feelings About the Metaverse
More than 51% of respondents bet against the future potential of the metaverse, 6% of whom were metaverse service providers.
However, a sector of Hong Kong fintech companies is actively pursuing metaverse-related developments. Enoch Fung, CEO of AoF and Executive Director of HKIMR, said:
“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.”