Government-backed studies in Hong Kong have highlighted decentralized finance (DeFi) and metaverse technologies as pivotal for enhancing the region’s standing in global fintech. Released on June 25 by the Hong Kong Institute for Monetary and Financial Research (HKIMR), under the Hong Kong Academy of Finance (AoF), the reports delve into the profound implications of these innovations.
Hong Kong’s report on DeFi underscores its rapid expansion, with market capitalization soaring from $6 billion in 2021 to over $80 billion by 2023. It emphasizes:
“These figures underscore the undeniable potential of DeFi.”
Despite comprising only 4% of the overall crypto-asset market, DeFi remains largely unexplored, with more than 70% of crypto businesses in the study yet to engage with its technologies.
Unlocking DeFi’s Potential
The study highlighted existing challenges in DeFi related to governance, compliance, and vulnerabilities but maintained optimism about its distinctive features:
“DeFi offers the potential for new financial services like liquid staking, flash loans, and automated market makers, enhancing innovation, automation, transaction speed, and financial inclusion.”
Regarding the metaverse, Hong Kong’s study found that local financial institutions showed moderate engagement despite strong interest. This aligns with the sentiment expressed by respondents from Hong Kong.
Over Half of Respondents Doubt the Metaverse’s Future
Enoch Fung, CEO of the AoF and executive director of the HKIMR, highlighted that a sector of Hong Kong fintech businesses is actively pursuing metaverse-related developments:
“Emerging technologies like DeFi and the metaverse, closely tied to broader virtual asset and Web3 developments, are expected to offer numerous opportunities for Hong Kong’s financial services industry.”
