Hong Kong anticipates the continued growth of its fintech ecosystem, with blockchain, digital assets, distributed ledger technology (DLT) and artificial intelligence playing a central role in shaping its future.
Hong Kong is home to over 1,100 fintech companies, which include 175 blockchain application or software firms and 111 digital asset and cryptocurrency companies, marking a 250% and 30% increase, respectively, since 2022, according to the Hong Kong Fintech Ecosystem report by InvestHK, a government department overseeing Foreign Direct Investments.
Participants of the Hong Kong Fintech Ecosystem. Source: InvestHK
Exploring deeper fintech revenue streams
The expansive growth of Hong Kongโs Web3 industry is attributed to proactive government policies and an active licensing regime for crypto exchanges or virtual asset trading platforms.
โThe revenue for the Hong Kong fintech market is projected to reach US$606 billion by 2032, with an anticipated annual growth rate of 28.5% from 2024 to 2032,โ the report stated.
InvestHK, along with other Hong Kong authorities, surveyed 130 fintech companies operating in Hong Kong and identified talent shortage as the top concern in the region, cited by 58.8% of respondents, followed by access to capital (43.9%).ย
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Addressing these hurdles will be critical to sustaining Hong Kongโs momentum to become the top financial hub.
Over 73% of the surveyed fintech companies operate in the AI subsector, far exceeding the 41.5% focused on digital assets and cryptocurrency.
Chinaโs โone country, two systemsโ policy at play
The InvestHK report highlighted Hong Kongโs advantage in adopting Chinaโs โone country, two systemsโ policy, allowing it to maintain a free-market economy, unrestricted capital flow, and strong global trade relations while benefiting from its proximity to mainland China.
As a result, the Hong Kong government was able to roll out several Web3 innovations, including a licensing regime, spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds, the Hong Kong Monetary Authorityโs stablecoin sandbox and tokenized finance and AI integration.
Hong Kong Monetary Authorityโs five-step โFintech 2025โ strategy. Source: HKMA
In 2021, the HKMA unveiled a strategy to establish itself as a financial hub by 2025.ย
The strategy included encouraging fintech adoption among banks, increasing Hong Kongโs readiness in issuing central bank digital currencies at both wholesale and retail levels, enhancing the cityโs existing data infrastructure and building new ones, increasing the supply of fintech talent and formulating supportive policies for the Hong Kong fintech ecosystem.
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