By ZHANG Xilong

Hong Kong will unveil a plan to develop its virtual asset market during Fintech Week (October 31 - November 4), according to a blog post by Financial Secretary Paul Chan. The plan will cover vision, strategy and regulation.

“It will make our stance clear, and demonstrate our commitment to making Hong Kong a hub for the global virtual asset market,” the post said.

Pathway to sustainable development

Virtual assets are assets that do not take physical forms but can be digitally traded, transferred and used for payment. Common examples are cryptocurrencies and NFTs.

In March, Secretary for Financial Services and the Treasury Christopher Hui wrote that the government should “put in place a comprehensive regulatory system to build up market confidence to provide a pathway to sustainable development.”

The Fintech Week will feature Web 3.0-themed talks covering topics including crypto assets, decentralized finance and the metaverse. Participants will be issued limited-edition NFTs, which can be redeemable for freebies at next year’s event.

The city now has more than 600 fintech firms, about a third from overseas. Faster Payment System, Hong Kong’s settlement system, processes HK$5.2 billion (US$700 million, 5.1 billion yuan) of transactions daily.

Hong Kong Monetary Authority will start testing a digital currency called e-HKD in Q4 to promote the virtual asset market.

“A virtual asset market will boost Hong Kong’s cash and information flows, and better data for regulators and policymakers,” said LI Yinlin of Lock Capital.

Enthusiasm is high

Hong Kong is the world’s second-largest IPO market and a gateway to China’s financial system. A number of measures in the past two years allow firms to list and trade bonds, exchange-traded funds (ETFs) and financial derivatives.

Many cities have announced plans for virtual assets. Hong Kong has slipped behind Singapore in the Global Financial Centres Index and a virtual asset market may reverse that position.

Only 4 percent of people in Hong Kong said they hold virtual assets but enthusiasm is high among young people. The market will give China an opportunity to participate in the global virtual asset market without major changes to its laws and regulations.

Shenzhen, Hong Kong and Macau have formed a “Metaverse Alliance.” Currently, it has 23 participants including private companies, research institutes, trade associations and government agencies