The city is positioned as a major financial hub in the digital era due to its strategic approach to both AI and cryptocurrency. With an emphasis on cryptocurrencies and artificial intelligence (AI), Hong Kong is intensifying its dedication to technical innovation.
At Hong Kong FinTech Week 2024, Paul Chan, the Financial Secretary, and Christopher Hui, the Secretary for Financial Services and the Treasury, gave speeches on Monday outlining the Hong Kong Monetary Authority’s (HKMA) comprehensive plan to leverage these emerging technologies and establish Hong Kong as a global financial hub.
Hong Kong is creating a uniform regulatory framework that will provide financial firms clarity and consistency in order to fully utilize AI. This framework seeks to ensure the appropriate development and application of AI technology by striking a balance between innovation and risk reduction.
“Hong Kong’s financial sector has what it takes to promote AI adoption – sizeable markets and rich scenarios,” said Christopher Hui, the Treasury’s secretary for financial services. “We will take a dual-track approach to promote development while addressing challenges.”
Hong Kong is also implementing new regulations to support the ethical application of artificial intelligence (AI) in financial services.
The FSTB described a “dual-track approach” in a release on October 28 that aims to manage related risks and encourage the adoption of AI.
These regulations seek to guarantee the safe application of AI technology in the financial industry, increase operational effectiveness, and improve customer service.
Companies like OpenAI and Google’s Gemini have limited their services in Hong Kong as a result of the increased geopolitical tensions between the US and China and the emphasis on AI.
Hong Kong is currently concentrating on creating and incorporating its own AI solutions in an effort to lessen reliance on these foreign technologies.
Local academic institutions are actively creating cutting-edge AI models that are suited to the particular requirements of the financial sector, including the Hong Kong University of Science and Technology. According to Hui, these models will provide financial institutions the ability to make data-driven choices, increase risk management, and better client experiences.
In addition, the Hong Kong Exchanges and Clearing Limited (HKEX) has declared that it will introduce a Virtual Asset Index Series on November 15. Bonnie Y. Chan, the company’s CEO, claims that this will provide “transparent and reliable real-time benchmarks” for Bitcoin and Ether.
The action is a component of the jurisdiction’s endeavors to firmly establish itself as a global center for cryptocurrency.
The SFC’s new pledge to license additional cryptocurrency exchanges by the end of 2024 supports these initiatives even more.
There are now two authorized exchanges that serve institutional and individual investors.
However, Eric Yip, the SFC’s Executive Director for Intermediaries, stated on October 28 during Hong Kong FinTech Week that a final list of cryptocurrency exchanges with full licenses
Adopting Crypto
As a major force behind future expansion, Hong Kong is also adopting cryptocurrencies in addition to AI. Hui claimed that because Hong Kong is expanding tax benefits to cover investments in virtual assets, the city is becoming a desirable location for companies involved in the cryptocurrency industry. The city’s larger plan to create an atmosphere that is favorable to cutting-edge technology, such as blockchain and cryptocurrencies, is in line with this action.
“This move will further recognize its role for asset allocation,” Hui added.
He noted that Hong Kong hopes to draw talent and capital from around the world to its developing crypto economy by providing attractive tax benefits.
Only three operators of virtual asset trading platforms—HKVAX, HashKey Exchange, and OSL Exchange—have official licenses from the SFC at the moment. However, the regulator stated that it is expediting the licensing procedure and anticipates awarding the first set of formal licenses to deemed-to-be-licensed VATP applicants by the end of this year.
Index
The business said Monday that Hong Kong Exchanges and Clearing (HKEX) will begin a virtual asset index series on November 15.
“We aim to empower investors to make well-informed investment choices by providing transparent and dependable real-time benchmarks. This will bolster the growth of the virtual asset ecosystem and strengthen Hong Kong’s position as a global financial hub,” stated Bonnie Y. Chan, CEO of HKEX.
CCData, a benchmark administrator and virtual asset data and index provider registered in the UK, will manage and construct the index. CoinDesk is the owner of CCData.
Both a reference rate and a reference index for bitcoin (BTC) and ether (ETH) will be included of the index series.
Using prices compiled from the best virtual asset exchanges, the reference index is a 24-hour volume weighted reference spot price of ether or bitcoin. It will be valued in US dollars and computed in real time.
The reference rate, which is determined every day at 4:00 PM Hong Kong time, is intended for the settlement of financial products.
By early 2025, a consultation panel will be established to guarantee appropriate collaboration amongst these approved platforms.
Hong Kong is putting itself in a position to draw in both domestic and foreign investors as a result of these actions, making it more competitive with other cryptocurrency hotspots like Dubai.
