Global Outlook: Digital Assets in Hong Kong
Race for Global Stablecoin
Defi, Open Finance, and Web3
Web3 at the FinTech Advisory Council
Global Conference 2024
At the inaugural Milken Institute Global Investors’ Symposium in Hong Kong, panelists discussed how the city is jockeying to become one of the world’s hubs for digital asset markets. The session “The Future of Digital Assets” featured insights into the resurgent global digital asset ecosystem, the use cases driving institutional adoption in Asia, and the strategies that Hong Kong is adopting as a regulator to encourage market development.
Ernest Ho, head of digital finance, Monetary Management Department, Hong Kong Monetary Authority (HKMA), moderated the session, which featured Deng Chao, CEO, HashKey Capital; Takashi Hayashida, founder and managing partner, Taisu Ventures; and Bojan Obradović, chief digital officer, HSBC Hong Kong.
Hong Kong has prioritized maintaining an orderly digital asset market. The Hong Kong Securities and Futures Commission’s regulatory regime for virtual asset trading platforms in Hong Kong has been in force since June last year, the South China Morning Post reports. Last year, HKMA also announced that it was developing a wholesale central bank digital currency for tokenized interbank settlement, the e-HKD, in partnership with 16 banks and payment processors, including HSBC, Hang Seng Bank, Alipay, Ripple, Giesecke+Devrient, Visa, and Mastercard, Ledger Insights reports.
Hong Kong announced this January a planned regulatory regime for stablecoin. The requirements for Hong Kong stablecoin issuers will be broadly similar to the requirements that other leading jurisdictions have implemented, such as banning algorithmic stablecoins, prohibiting interest-bearing stablecoins, and spelling out reserve requirements, according to Reed Smith. With the EU’s Markets in Crypto-Assets coming into effect this June and stablecoin regimes already online in Japan and the UAE, the US faces mounting pressure to regulate stablecoin, especially as the global stablecoin market is principally denominated in USD.
All eyes are on the US to see if they will lead in setting global standards for stablecoins. In a recent op-ed in Project Syndicate, Dante Disparte, chief strategy officer and head of global policy at Circle and FinTech advisory council member, said, "The United States risks becoming an outlier if it does not establish new rules in 2024. Policymakers can choose among three potential paths to managing risks and opportunities in the crypto market: regulation, legislation, and designation." Stablecoin legislation remains the most likely piece of the American digital assets framework to reach a floor vote this year, Politico reports.
Nicole Valentine co-authored an op-ed in CoinDesk with Mo Shaikh, Aptos Labs CEO and FinTech advisory council member, on open financial protocols, Web3, and their role in increasing financial access and independence for end users. Open finance lies at the intersection of open banking, decentralized finance, and Web3 architecture.
Where regulators have embraced open banking, consumers have been able to securely share their banking data with regulated third parties operating financial apps, products, and services that are faster, cheaper, and more agile than traditional banks. Valentine and Shaikh urge builders to take open banking to the next level. According to McKinsey, marrying open financial data and application programming interfaces with the underlying blockchain infrastructure of Web3, applications can open the door to decentralized open finance protocols unlocking new efficiencies across the financial sector in payments, derivatives, exchanges, credit, insurance, and asset management, as reported by The Wharton School.
This March, Kate Laurence, CEO, Bloccelerate VC and Milken YLC member, addressed the FinTech Advisory Council about the state of Web3 going into 2024. She shared her perspective that Web3 is entering its second infrastructure era, paralleling the early internet’s second period of infrastructure development. From her vantage point, once the hype of the dot com boom subsided and broadband was built out at scale for the first time, a new wave of now ubiquitous Web2 applications was born. She identified top trends, including restaking, the tokenization of real-world assets, account abstraction, AI, decentralized physical infrastructure, and modular applications in Web3 infrastructure.
Our 2024 Global Conference theme, “Shaping a Shared Future,” is a reminder that despite the challenges we face, we are united in our aspirations for a better tomorrow. The FinTech team is excited to program a series of public sessions with leaders in technology, finance, and government exploring the future of money, new digital infrastructure, and artificial intelligence’s impact on our economy.
Join us for the 2024 Global Conference livestream May 5–8.
By 2022, according to the International Monetary Fund, of the one-quarter of countries in sub-Saharan Africa that formally regulated crypto, two-thirds of these had implemented restrictions and six...
