As the city makes a big push to become a virtual asset and Web3 hub, the reports offer insights for market participants and regulators, locally and internationally, which will help form policy initiatives and market innovations, Fung said at a media briefing on Tuesday.
HKIMR coordinated with consultancy PwC to conduct the two surveys, studying organisations in the asset and wealth management, banking, insurance, virtual asset and metaverse service industries.
A total of 59 entities took part in the survey on DeFi, which is the delivery of financial services without traditional financial intermediaries, offering a more cost-effective, accessible and secure alternative. Meanwhile, 55 institutions joined the survey on metaverse, a technology platform to experience virtual reality.
Local market participants are increasingly keen on virtual assets. More than half of the financial institutions in the DeFi survey have already incorporated such assets into their core business operations, while 85 per cent expect to have done so three years from now.
Virtual assets are digital representations of value that can be digitally traded, transferred, or used for payment or investment purposes. They include tokenised traditional assets, stablecoins, cryptocurrencies, NFTs and products around custodian and tokenisation solutions.
In the metaverse study, 65 per cent of the respondents said they are involved in the virtual reality world with applications ranging from marketing and promotion to internal operations and from talent recruitment to workplace social events that help promote “interactions with customers, employees and the general public”, said Giorgio Valente, head of HKIMR.
A common challenge is the lack of talent and expertise, which affects the progress of the adoption of these technologies, according to the reports. Other key hurdles include uncertainty in governance structures, legal and regulatory compliance, cybersecurity and data management risks.
Hong Kong has seen a wave of exits by some of the largest global cryptocurrency exchanges, including Binance and HTX, as the city has been criticised for its restrictive regulatory regime.
Fung said the guiding principle for regulating financial innovations worldwide has been “same activity, same risk, same regulation” with some local nuances.
“The broad direction [in] the overall international community is to provide a certain level of consistency, coordination and collaboration on many aspects,” Fung said, referring to monitoring risks and data gaps.
“Hong Kong regulators have been very active in participating in those regulatory discussions. We have a role to play in the international standard-setting bodies, providing our input and consolidating our role as an international financial centre.”
This news is republished from another source.
