Fintech
Hong Kong targets DeFi, metaverse for fintech expansion — TradingView News
Government-backed studies in Hong Kong have identified decentralized finance (DeFi) and metaverse technologies as new opportunities to strengthen the region’s dominance in the global fintech landscape.
The Hong Kong Institute of Monetary and Financial Research (HKIMR), the research arm of the Hong Kong Academy of Finance (AoF), released two reports on June 25, each detailing the implications of DeFi and the metaverse on the financial sector.
The Hong Kong DeFi report highlighted the ecosystem’s explosive growth from a modest market capitalization of $6 billion in 2021 to over $80 billion in 2023. It added:
“These numbers prove that the potential of DeFi cannot be ignored.”
DeFi, which represents 4% of the overall cryptocurrency market, remains a largely untapped market at present. As shown below, over 70% of the crypto companies in the study have yet to explore the technology. Cointelegraph
Read Cointelegraph’s beginner’s guide to learn more about decentralized finance.
Harnessing the Potential of DeFi
The study highlighted existing problems in DeFi in terms of governance, compliance and vulnerability, but remained largely optimistic about its unique features:
“DeFi has the potential to provide new financial services, such as liquid staking, flash lending and automated market makers, with reduced transaction speed and greater innovation, automation and financial inclusion.”
Regarding the metaverse, the Hong Kong study revealed that local financial institutions showed a moderate level of commitment despite their high interest in it. This result is in line with the sentiment shown by Hong Kong respondents.
Mixed feelings about the Metaverse
Over 51% of respondents are betting against the potential future of the metaverse, of which 6% were metaverse service providers.
However, a sector of Hong Kong fintech firms is actively pursuing metaverse-related developments. Enoch Fung, CEO of AoF and Executive Director of HKIMR, said:
“Emerging DeFi and metaverse technologies, which are closely linked to broader virtual assets and Web3 developments, are likely to present various opportunities for the financial services sector in Hong Kong.”