Hong Kong is exploring DeFi and Metaverse technologies to strengthen its presence in the fintech industry.

The Hong Kong government is focusing on decentralized finance (DeFi) and metaverse technologies to strengthen its position in the global fintech industry.

The Hong Kong government is focusing on decentralized finance (DeFi) and metaverse technologies to strengthen its position in the global fintech industry.

The Hong Kong Institute for Monetary and Financial Research (HKIMR), the research division of the Hong Kong Academy of Finance (AoF), recently published two reports analyzing the impact of DeFi and metaverse on the financial sector.

One of the reports highlights the significant growth of DeFi, with its market capitalization increasing from $6 billion in 2021 to over $80 billion in 2023.

Hong Kong recognizes the potential of DeFi and emphasizes its explosive growth in their study, stating that it cannot be overlooked.

Currently, DeFi accounts for 4% of the overall crypto-asset market and remains largely untapped.

The study reveals that more than 70% of crypto businesses involved in the research have yet to explore the potential of DeFi.

Despite challenges in governance, compliance, and vulnerabilities, the study is positive about the distinctive features of DeFi, including its capacity to offer innovative financial services with improved automation and inclusion.

Regarding the metaverse, the study notes a moderate level of involvement from local financial institutions despite their keen interest in the technology.

This perspective is consistent with the views of respondents from Hong Kong, with more than 51% expressing doubts about the future prospects of the metaverse.

Nevertheless, a segment of the fintech industry in Hong Kong is actively exploring metaverse-related advancements, demonstrating a rising interest and acknowledgment of its potential.

Officials from Hong Kong recently promoted the city in Canada at a tech conference in Toronto. They showcased Hong Kong's offshore technology hub for Canadian crypto and Web3 startups. The Hong Kong Economic and Trade Office in Toronto, Invest Hong Kong, and StartmeupHK collaborated to host an event at Collision 2024.

Despite positioning itself as a crypto-friendly hub, Hong Kong experienced several crypto exchange closures in May. HKVAEX, suspected to be affiliated with Binance, withdrew its license application on March 28, 2024. This was followed by closures of IBTCEX, QuanXLab, Huobi HK, Gate.HK, OKX HK, and Bybit (Spark Fintech Limited) in May.

These closures have reduced the number of virtual asset trading platforms in Hong Kong, with only 17 remaining on the application list. Wu Shuo, a member of the Hong Kong Legislative Council, recently criticized the cryptocurrency licensing system in Hong Kong, citing its negative impact on market confidence.

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