- Hong Kong Fintech Week opened this week.
- The Hong Kong Monetary Authority clarified its stance on crypto.
- The regulator supports the BIS‘ Finternet vision.
Hong Kong has made bold moves in the crypto space, aiming to attract Web3 talent and capital. From granting more exchange licenses to introducing benchmark BTC and ETH pricing on the HK Stock Exchange, the region has signaled strong support for the digital asset industry and its growth potential.
However, during Hong Kong Fintech Week, Hong Kong Monetary Authority’s (HKMA) chief executive Eddie Yue clarified that regulators’ main focus would be on “Finternet,” a framework promoted by the Bank of International Settlements (BIS).
Hong Kong Regulator Has a Plan
Hong Kong Fintech Week kicked off on Monday with a packed agenda, including spotlighting innovations like Middle East expansion plans and strategies for ecological sustainability.
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In his opening remarks, Yue outlined the HKMA’s vision for Hong Kong’s financial landscape, emphasizing priorities like tokenization, artificial intelligence, and data-driven approaches to enhance efficiency and innovation.
However, Yue quickly clarified that the HKMA’s take on tokenization differs significantly from that of crypto assets, which he views as inherently speculative. He stated that the HKMA’s stance is to allow the crypto asset space to grow and develop while implementing safeguards to protect investors.
Instead, Yue views tokenization as an innovative method for recording the value and ownership of money and assets in digital form on programmable, interoperable ledgers, as outlined under the BIS’s Finternet concept.
What is the Finternet?
BIS general manager Agustín Carstens delivered a speech in April outlining the Finternet concept, envisioning a future financial system built on a global network of interconnected networks.
This framework aims to facilitate seamless data, information, and resources exchange among users and devices worldwide. Crucially, it will feature two tiers of money: central bank digital currencies and commercial bank money, leaving no room for private crypto assets.
How Will It Work?
The goal of the Finternet is to enable individuals and businesses to transfer financial assets to anyone using any device. The transactions would be inexpensive, secure, and nearly instantaneous, making financial services accessible to all.
At the core of this system are digital platforms that merge traditional database functions for tracking asset ownership with necessary governance rules for updating records. These platforms enable smart contracts, self-executing applications that automatically trigger actions, such as accounting for asset sales when certain conditions are met.
Tokenization, as mentioned by Yue, plays a critical role here, with tokenized assets existing on programmable ledgers that encapsulate the information needed to uniquely identify both the assets and their owners, along with the rules governing their use.
Carstens emphasized that Finternet is not about creating a “one ledger to rule them all” system. Instead, he envisioned a landscape where multiple interconnected ledgers coexist, each tailored to the specific needs of its jurisdiction.
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