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Published: 16:56, November 01, 2022 | Updated: 15:17, November 02, 2022
Hong Kong has bright future as a fintech powerhouse
By Oriol Caudevilla
Published:16:56, November 01, 2022 Updated:15:17, November 02, 2022 By Oriol Caudevilla

Oriol Caudevilla says city will prosper if it continues reopening to the world and attracting more talent and high-caliber events

This week (Oct 31 through Nov 4), Hong Kong is celebrating its FinTech Week, an event in which I have the pleasure to participate as a speaker in a panel called “Virtual Assets: Preparing for a Regulated Future”. Hong Kong FinTech Week is set to attract 20,000 attendees and 3 million online viewers, and it is presented by InvestHK and by the Financial Services and the Treasury Bureau (FSTB), with Finoverse (previously known until now as Finnovasia) the appointed event organizer. It will be therefore celebrated in a hybrid format, which is indeed good news, since it is the first time since 2019 that the event will not be only virtual. (The last two editions had to be virtual-only because of the pandemic.)

To me, FinTech Week will be a very relevant event for a myriad of reasons, but especially because of three; i.e., for starters, as I mentioned before, because this will be the first major in-person event celebrated in the special administrative region since travel restrictions were eased in late September, and will be held alongside the Global Financial Leaders’ Investment Summit on Nov 1-3, and the Rugby Sevens on Nov 4-6. Hong Kong may not have fully reopened yet to the world, but these events show that more visitors are willing to fly to Hong Kong, which will undoubtedly allow Hong Kong to maintain and even strengthen its role as one of the world’s most important financial centers. FinTech Week will thus be one of the biggest gatherings of global fintech heavyweights in the city since the pandemic.

Secondly, because this event highlights the importance of fintech in Hong Kong (and the Guangdong-Hong Kong-Macao Greater Bay Area), and it shows once again that, despite the last three and a half years of hardships, and despite the competition from other financial centers, Hong Kong remains as strong as ever. Hong Kong, Macao (to a lesser but relevant extent) and the rest of the Greater Bay Area are indeed increasing their role as fintech hubs.

Last year, for example, the Hong Kong Monetary Authority unveiled Fintech 2025, its new strategy aimed at driving Hong Kong’s fintech development these coming years, based on five pillars: all banks go fintech, future-proofing Hong Kong for central bank digital currencies, creating the next-generation data infrastructure, expanding fintech-savvy workforce, and nurturing the ecosystem with funding and policies. Fintech 2025 aims to encourage the financial sector to adopt technology comprehensively by 2025, and also, as per the words of Eddie Yue Wai-man, chief executive of the HKMA, to “promote the provision of fair and efficient financial services” for the benefit of Hong Kong residents and the economy.

As I have mentioned in some previous articles, Hong Kong’s future is not so much about remaining as the gateway to the Chinese mainland but mostly about keeping and enhancing its current status as one of the world’s most important financial centers by adopting the very economic initiatives that are relevant to the development blueprint for the Greater Bay Area.

In that sense, Fintech 2025 is aligned with the 14th Five-Year Plan (2021-25) for National Economic and Social Development, and the Long-Range Objectives Through the Year 2035, which recognized Hong Kong’s economic potential at the national level.

Thirdly, FinTech Week will also be a very relevant event because of the very important announcement made at the beginning of Day 1 of the Conference by the FSTB regarding cryptocurrencies and other virtual assets: Hong Kong will allow exchanges and other intermediaries to sell assets directly to retail investors. This change comes four years after the city limited exchanges to serving only those with portfolios of HK$8 million ($1.02 million) or more, who were considered as professional investors, thus excluding retail investors.

In this sense, the HKSAR’s pivoting toward a friendlier regulatory regime for cryptocurrencies shows us that Hong Kong is ready to become an even more important virtual assets center/crypto hub, and also that the “one country, two systems” principle is working perfectly.

The Financial Services and Treasury Bureau, in its Policy Statement on Development of Virtual Assets in Hong Kong, recognizes the potential of distributed ledger technology (DLT) and Web 3.0 to become the future of finance and commerce, and “under proper regulation they are expected to enhance efficiency and transparency, which in turn will reduce or resolve existing frictions across clearing, settlement and payments. Hong Kong shows signs of a vibrant virtual assets ecosystem, as demonstrated by NFT (non-fungible token) issuance in our market, presence of metaverse developers, and use of DLT in trade, finance, etc. Further opportunities can be realized if we cast our sight further on more use cases, e.g., trading arts and collectibles, tokenizing vintage goods, or in the case of financial innovations, tokenizing a wide spectrum of products such as debt securities”.

The Legislative Council is currently reviewing Hong Kong’s new virtual asset service provider licensing regime as part of proposed amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The regime is set to come into effect March 1 next year.

Hong Kong’s Securities and Futures Commission (SFC) will conduct a public consultation on how retail investors may be given a “suitable degree of access to virtual assets” to licensed exchanges.

The policy statement demonstrates Hong Kong’s commitment and determination to explore financial innovations together with the global virtual assets community.

To sum up, kudos to InvestHK, the Financial Services and the Treasury Bureau, and Finoverse for creating and organizing such an amazing event whose consequences go beyond those of just being a great event. Conferences like this one are what made Hong Kong become one of the world’s most important financial centers, and events like this one are what will make Hong Kong remain and even strengthen its role as one of the world’s top financial centers. It is not just about organizing a good conference: A city needs the right ecosystem to allow its industries to thrive, and in this sense, Hong Kong has all the right elements to allow its financial industry in general and its fintech industry in particular to keep thriving. Hong Kong remains the best place for developing the future of payments, digital currencies and Web3 technologies. All Hong Kong needs is to keep reopening to the world and keep attracting more talent and high-caliber events like the Hong Kong FinTech Week, so Hong Kong’s future can be not only as bright as its past, but even brighter.

The author is a fintech adviser, a researcher and a former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.

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