The Hong Kong Web3 Blueprint is a program developed by Web3 Harbour to articulate a unified industry voice on how Web3 technologies can help realise the Hong Kong Government’s strategic policy objectives. This first volume contributes directly to the government’s goal of enhancing Hong Kong’s position as an International Financial Centre (IFC), offering concrete perspectives on how blockchain and decentralised systems can support economic growth, innovation, and global competitiveness.
In line with many of the themes raised in the recent Chief Executive’s Policy Address, we suggest prioritising opportunities where Hong Kong already has a competitive advantage or where we have the potential to attract significant investment and deal/ transaction flow. In our view the areas that represent the largest opportunities in Hong Kong for leveraging blockchain technology include:
Doubling Down on Open Finance
Open finance, when conceptualised as the productisation of financial data, is an evolving topic in Hong Kong. Efforts such as Hong Kong’s Open Banking strategy have begun to bridge the siloed nature of the financial world with the open data flows of the internet. Notably, given their inherently open and datarich nature, there is a space for Web3 technologies to drive this paradigm forward.
Value Benefit:
- For Consumers: Greater control over financial data, improved access to personalised financial products, and enhanced security against data misuse.
- For SMEs: Improved access to financing through alternative credit data and reduced reliance on traditional banking relationships.
- For Financial Institutions: New revenue streams from tokenised data, improved risk assessment, and enhanced compliance capabilities.
- For Regulators: Better oversight through real-time auditability of datasharing transactions and improved enforcement of data privacy laws.
Hong Kong as a Place To Raise Capital
As a global financial centre, Hong Kong has developed a mature and sophisticated public markets infrastructure that functions well and has stood the test of time. However, while there are well-trodden routes for companies to raise funds via primary equity and bond issuances, these are expensive and there are funding gaps for early-stage and growth-stage businesses that do not currently have access to capital markets.
However, it is within the private assets universe, which often suffer from limited liquidity, high transaction costs and limited access to reliable and real time data, that we see the most significant opportunities for innovation using the Web3 Superpowers identified above, as well as more greenfield opportunities for Hong Kong businesses to build out new financial markets.
Examples of sectors where we believe there is potential demand and benefits for Hong Kong to explore are:
- Tokenised Private Credit
- Tokenised Physical Infrastructure (including renewable energy sources)
- IP and Data Assets
Hong Kong as an Asset and Wealth Management Centre
As an established and large asset and wealth management centre, Hong Kong can further scale the significant Assets Under Management in the city and benefit from the growth of the tokenised asset universe by offering a diverse and innovative range of products and services to meet the evolving needs and preferences of investors, both institutional and retail. Hong Kong can leverage its strong legal and regulatory framework, its deep pool of talent and expertise, and its connectivity with Mainland China and the rest of the world to attract and retain asset managers, custodians, intermediaries, and platforms that operate in the tokenisation asset space.
It is our view that the efficiency gains promised to the asset and wealth management sector from tokenisation will only be truly realised when it is possible and economically viable to
bring all aspects of the management of clients’ funds into an on-chain environment where they can be managed within the same layer of blockchain and making use of tokenised
settlement options. This includes the following:
- Fund Vehicles: There is a need to have a new blockchain native fund vehicle for Hong Kong. These could pool together assets from a number of customers or instead could be established to hold just a single investor’s wallet (e.g., a kind of tokenised, separately managed account or fund of one).
- Settlement: Subscriptions and redemptions involving tokenised funds or trade settlement for funds investing in tokenised assets need to use stablecoins, central bank digital currencies (CBDCs) or other forms of tokenised bank deposits that can execute in real time and interact with the relevant blockchain network.
- Tokenised Investments: To date, the investable universe of tokenised assets is extremely limited and primarily consists of cryptocurrencies, some tokenised funds and stablecoins. Progress has been made in Hong Kong on tokenised bonds and we have recently seen the launch of Hong Kong’s first tokenised money market funds. However, as a wider variety of capital is raised in tokenised form (see the section on Hong Kong as a Place to Raise Capital), this will create opportunities for the asset and wealth management sector.
- Ecosystem Providers: Building a successful Asset and Wealth Management ecosystem also requires a sophisticated and credible pool of technology-enabled service providers, such as custodians, tokenisation platforms, fund administrators and legal and accounting service providers.
Carbon Markets and Impact Investing
Hong Kong is positioning itself as a regional hub for green finance, with government-led initiatives aimed at carbon neutrality and sustainable development. The city’s financial sector has seen increasing interest in Environmental, Social, and Governance (ESG) investing, and the development of voluntary carbon markets (VCMs) has gained traction. The HKMA is the leading issuer of green bonds in Asia, while it also leveraged blockchain for the issuance of tokenised green bonds in 2023 and 2024. Further, the government has launched the Digital Bond Grant Scheme (DBGS) to promote digital bond issuance in Hong Kong and cultivate the local digital asset ecosystem.
Value Benefit:
- For Investors: Greater transparency and confidence in ESG investments with real-time carbon credit tracking.
- For Businesses: Lower costs for compliance and verification, expanding access to carbon markets.
- For Regulators: Enhanced oversight of carbon trading and improved alignment with global sustainability standards.
- For Hong Kong’s Green Finance Centre Strategy: Strengthening Hong Kong’s position as a leader in sustainable finance and attracting global ESG-focused capital.
Hong Kong as an International Trade and Supply Chain Finance Centre
Hong Kong is a premier global trade hub, serving as a gateway for international commerce between China and the world. With a highly developed financial infrastructure, extensive trade networks, and proximity to major global supply chains, the city plays a crucial role in international trade finance. Despite advances in digital trade initiatives, trade finance remains heavily reliant on manual processes, paper-based documentation, and legacy banking systems. Inefficiencies in cross-border payments, financing, and compliance processes can create friction, leading to delays, increased costs, and reduced accessibility, particularly for SMEs.
Value Benefit:
- For Businesses and SMEs: Faster access to financing, reduced transaction costs, and improved trust in trade relationships.
- For Financial Institutions: Lower operational risks, enhanced compliance automation, and increased market participation. Opportunities to build out new service offerings to support the needs of corporate treasurers (for example stablecoin-to-stablecoin foreign exchange as well as tokenised derivatives (e.g., stablecoin currency futures, etc. markets to help companies to hedge interest rate and foreign exchange risks associated with financing supply chains.
- For Regulators: Greater transparency in trade flows, real-time compliance tracking, and reduced financial crime risks.
- For Hong Kong’s Trade Hub Strategy: Strengthening Hong Kong’s position as a leading trade finance centre and fostering economic growth through digital trade solutions and services to support corporate treasurers.
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