Hong Kong’s Chief Executive has outlined an ambitious plan to establish a leading fintech ecosystem, with a particular focus on virtual assets, as revealed in Article 99 of the 2024 Policy Address. The government’s strategy encompasses a multi-pronged approach designed to solidify Hong Kong’s position as a global fintech hub.
Central to the plan is the promotion of Central Bank Digital Currencies (CBDCs) for cross-border payments. The Hong Kong Monetary Authority (HKMA) is actively expanding the mBridge platform, testing and exploring new technologies to facilitate seamless cross-border trade settlements, and broadening participation from both public and private sectors.
The government also aims to enhance the regulation of virtual asset (VA) trading. The Financial Services and the Treasury Bureau (FSTB) will soon conclude the second round of public consultation on regulatory proposals for over-the-counter (OTC) VA trading and will propose a licensing regime for VA custodian service providers. This move signals a commitment to balancing innovation with robust regulatory oversight.
Further bolstering the virtual asset landscape, the HKMA is driving Project Ensemble, a financial market infrastructure project exploring real-world asset tokenization and the use of digital money for interbank settlements. The HKMA is also providing a sandbox environment for potential stablecoin issuers to test their business plans and use cases, and will collaborate with the FSTB to introduce a bill regulating fiat-referenced stablecoin issuers later this year.
To encourage wider adoption of tokenization technology, the HKMA will soon launch a Digital Bond Grant Scheme, incentivizing financial institutions and issuers to utilize this technology in capital market transactions.
This comprehensive strategy, encompassing CBDCs, enhanced VA regulation, real-world asset tokenization, and the promotion of a digital securities market, underscores Hong Kong’s commitment to fostering a vibrant and innovative fintech ecosystem. The government’s proactive approach, combining technological advancement with a carefully considered regulatory framework, positions Hong Kong to become a leading player in the global fintech arena.
