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Hong Kong increases support for web3, institutional DLT usage

hong kong web3 dlt

Yesterday, Hong Kong’s Financial Secretary, Paul Chan, published a blog post that was very supportive of web3 and the metaverse. And the Hong Kong Monetary Authority (HKMA) released its fintech roadmap aiming to encourage greater use of AI and DLT in the financial sector, particularly by banks.

Mr. Chan’s blog post referred to a recent Web3 event focused on entertainment held by Cyberport, a digital tech ecosystems and business park that’s owned by the Hong Kong government.

He mentioned a few use cases such as farmers digitally tagging their livestock which enables them to track the animals in real time using IoT. Combined with an immutable blockchain, it allows the livestock to be used as collateral for financing.

With all the applications mentioned, Mr Chan avoided dropping specific company names. But the reference to a local startup collaborating with fashion designers for virtual world fashion would likely include Animoca Brands and the designer initiative with the likes of Diane von Furstenberg and Michael Kors that involves its subsidiary The Sandbox. Animoca Brands is also a Cyberport resident.

Hong Kong’s recent tokenized green bond issuance was also treated by Mr. Chan as another web3 initiative.

HKMA’s fintech roadmap includes DLT

On Friday, the HKMA published its fintech promotion roadmap and report that features AI and DLT. It covers a wide range of activities including a knowledge hub, events, training and research.

One of the aims is to try to remove adoption challenges for both AI and distributed ledger.

It described the potential use cases that financial institutions are expected to investigate by 2025, including “CBDCs, clearing and settlement, credit scoring, tokenisation of financial assets and trade financing.”

However, it still sees a need for more education and clarity about the regulatory issues around the world for institutions with a global target market. It identified talent shortages and hence the need to develop more skills. Plus it noticed that both AI and DLT can be expensive to deploy resulting in the need to be able to identify business cases with sufficient returns to justify the expense.

Meanwhile, Hong Kong relaxed its stance on cryptocurrency relatively recently. It has granted licenses to OSL and HashKey allowing them to target retail investors. Today HashKey had its launch event.

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