DeFi

Hong Kong, the next big revolution in the field of cryptocurrencies? DeFi and Metaverse projects revealed

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Is Hong Kong the next big thing in crypto?

Hong Kong is positioning itself as a leader in the global fintech landscape by focusing on crypto-related sectors such as decentralized finance (DeFi) and the Metaverse.

Recently supported by the government studies Research conducted by the Hong Kong Institute of Monetary and Financial Research (HKIMR), part of the Hong Kong Academy of Finance (AoF), highlighted the importance of these digital frontiers in shaping the future of the economy. 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 Advance in 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 only accounts for 4% of the overall crypto-asset market, it remains largely untapped, with around 71% of surveyed crypto businesses in Hong Kong not yet exploring this avenue.

Respondent’s involvement in the development or operation of DeFi protocols. | Source: aof.org.hk

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 respondents 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 developments related to the metaverse, exploring how virtual environments can play a central role in financial services.

Enoch Fung, CEO of the AoF and Executive Director of the HKIMR, highlighted the interdependent nature of DeFi, the metaverse and broader Web3 technologies as crucial to the future of Hong Kong’s financial services sector. Fung noted in particular:

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.

Upgrade to Crypto Hub Cement status

Hong Kong’s broader strategy includes becoming a central hub for cryptocurrency innovation and activity. This intention is supported by recent regulatory milestones, such as Hong Kong’s 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.

To further foster this environment, industry leaders 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.

The value of global crypto market cap on 1-day chart. Source: TOTAL Crypto Market Cap TradingView.com

Featured image created with DALL-E, chart by TradingView

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