It isn’t difficult to see how hard Hong Kong is working to revolutionize its financial front, as evidenced by the array of initiatives announced at its annual FinTech Week — where throngs of tech-savvy entrepreneurs and venture capitalists from across the globe are gathered at the sprawling AsiaWorld-Expo complex in search of opportunities.

From exploring cross-border usage of central bank digital currencies (CBDCs) to launching the first cross-sectoral sourcing platform and new batches of tokenized green bonds, the official message is clear: The Asian financial hub is on track to lead the digital-asset charge.

Numbers speak louder than words. The five-day fintech gathering, which opened on Monday, is expected to draw over 30,000 attendees from more than 100 economies, and feature over 700 exhibiting companies.

“Hong Kong is really trying to be the most advanced, in terms of knowledge, in terms of welcoming new technologies and innovation, and, which is very important, by having a comprehensive regulatory framework and regulatory environment,” said Harald Eltvedt, who oversees venture building and incubation at SC Ventures — the innovation, fintech investment, and venture building arm of Standard Chartered Bank.

Serving as Standard Chartered’s conduit for its digital asset forays, SC Ventures has incubated and developed more than 30 startups globally, about one-fifth of which are doing business in Hong Kong. These include tokenization company Libeara and local virtual bank Mox.

Its incubation portfolio, featuring “institutional-grade innovation”, offers a glimpse into Hong Kong’s growing fintech landscape. According to Financial Secretary Paul Chan Mo-po, the city is now home to about 1,100 fintech and Web3 firms, up 15 percent from last year.

As a veteran entrepreneur with more than 15 years of experience building technology startups from inception, Eltvedt offers a bold prediction that “Hong Kong will be one of the top places in the world for digital assets”, spanning a vast ecosystem from cryptocurrencies to stablecoins, CBDC, tokenized capital market products and beyond. “Digital assets are here to stay.”

The right balance between regulation and innovation is seen as one of the key differentiators that digital asset companies can find in Hong Kong, and one that is particulary compelling, said Alexandre Deschatres, who leads business development of Libeara at SC Ventures.

“When I look at many other jurisdictions, everyone is doing something different. But here in Hong Kong, what I find very encouraging is the dialogue between the regulators and the market participants,” he said, adding that Hong Kong has been doing well by consulting the industry before the regulations in this area are formally proposed and making sure that well-considered, technology-neutral regulatory framework is in place before new business models can be rolled out to the market.

Having successfully completed a joint tokenized deposit pilot under Hong Kong’s Fintech Supervisory Sandbox, Libeara has now set its eyes on testing tokenized fund transactions and tokenized money settlement under the Hong Kong Monetary Authority’s second phase of the e-HKD pilot program.

Deschatres said all the potential opportunities, including retail and wholesale CBDCs, are covered, being analyzed and tested for use cases that could meet client demand and the needs in this novel and rapidly developing market.

For authorities, strengthening digital assets is a key part of efforts to gain an advantage amid stiff global financial sector competition, and drive post-pandemic economic growth.

According to Boston Consulting Group’s research report released this March, the adoption of new mediums of exchange, including retail CBDCs, tokenized deposits and stablecoins could potentially generate an additional 0.5 percent in Hong Kong’s GDP growth per year for the next decade.

Such growth is underpinned by multiple factors such as unlocking liquidity through tokenization, the global consulting firm wrote, estimating the size of assets potentially available for tokenization in Hong Kong at around HK$36 trillion ($4.63 trillion).

Ray Wong, founder of LuTech Labs, a blockchain company that incubates Web3 projects, said there have been many changes in Hong Kong, among society, the government, and in the digital-asset industry.

Testament to this huge shift is that the current mindset of embracing digital assets stands in stark contrast to 2018, when he started his venture and society was generally skeptical about the ecosystem. “The ambition in growing the industry is very obvious,” Wong said, citing regulations coming out one after another to protect traditional investors.

Peko Wan, co-CEO of crypto payment firm Pundi X, is among the 30,000 attendees of Hong Kong FinTech Week this year. Founded in Indonesia, the startup was supposed to broaden its retail bitcoin payment network in Hong Kong, planning to deploy some of the 5,500 units in the city in 2018. But it ended up leaving for greener pastures as its efforts challenged the regulator’s position, which does not qualify virtual assets as a means of payment.

This year, Wan said she is up for learning about the development and regulatory situation in Hong Kong with local payment companies.

“Hong Kong is yet to release its full potential in digital assets,” Wan said, adding that she’ll wait and see if there are opportunities to tap the market.

Contact the writer at evanliu@chinadailyhk.com