Government Studies Highlight DeFi and Metaverse Growth
The government of Hong Kong is now realizing the importance of decentralized finance (DeFi) as well as the implementation of metaverse technologies with a goal to secure its position in the fintech market.
As part of their continuous efforts to explore the implications of DeFi and metaverse technologies on the economy, the Hong Kong Institute for Monetary and Financial Research (HKIMR) released two reports in collaboration with Hong Kong Academy of Finance (AoF).
A report that the circulation volume of decentralized finance (DeFi) is surging points out DeFi’s remarkable growth which is from the $6 billion market capitalization it achieved in 2021 to over $80 billion in 2023.
DeFi’s Potential Can’t Be Ignored: Hong Kong
The Hong Kong research dealing with DeFi emphasizes the rapid growth of the ecosystem and claims that it should not go unnoticed. Although its basis is in tradable tokens, DeFi, representing only 4% of the total crypto-asset market, is still practically a virgin field.
It is discovered from the research that over 70% of the crypto businesses who took part in it have never tried the DeFi concept. The report does not deny the existence of challenges linked to governance and compliance nor the threats of vulnerabilities. Instead, it sees the positive side of the uniqueness of DeFi, such as enhancement, electronification, and financial inclusion, which are used to offer new financial services.
Metaverse Engagement and Interest
Dealing with the engagement in the metaverse platform, the research mentioned in the study discovers that the level of commitment is not very high, despite general interest in the technology among domestic financial institutions. This feeling is consistent with the insights of Hong Kong residents, 51% of whom said that they doubt the success of the metaverse in the future.
Nevertheless, one subdivision of the Hong Kong Fintech industry is very seriously enthusiastic about making little metaverse-related changes, proving that there is a strong enthusiasm and support for the project.
Enoch Fung, the head of the AoF and the representative director of the HKIMR, is agreed about the link between DeFi, the metaverse, virtual assets, and Web3 developments. “The new technologies consisting of decentralized finance and the metaverse, which are closely related to the broad-based virtual asset and Web3 developments, are most likely to be a source of various opportunities for the financial services industry in Hong Kong”.
Promoting Hong Kong in Canada
Hong Kong government organizations were present at an event in Toronto where they introduced their offshore tech centre to Canadian crypto and Web3 start-ups.
The Hong Kong Economic and Trade Office in Toronto (Toronto ETO), Invest Hong Kong (InvestHK), and StartmeupHK (SMUHK) combined and held a joint program at Collision 2024.
Whereas Hong Kong is still establishing the city’s identity as a crypto adopter, in May this area saw a number of crypto exchanges shutting down. On March 28, 2024, HKVAEX, suspected to be related to Binance, withdrew its license application. After that, on May 14, IBTCEX, QuanXLab, and Huobi HK withdrew their licenses, followed by Gate.HK closing on May 22, OKX HK on May 24, and Bybit (Spark Fintech Limited) on May 31.
These withdrawals have only left 17 virtual asset trading platforms on the list, with a total of 11 companies withdrawing or returning their license applications.
“Hong Kong’s cryptocurrency licensing rules in its financial markets were labeled by the legislator Wu Shuo as a negative one”, which is a critical view of the prevailing licensing regulations education programs and mentoring schemes, and its impact on the marketʼs confidence will be discussed
