Hong Kong is setting its sights on decentralized finance (DeFi) and the metaverse to bolster its position as a global fintech leader, according to government-backed research.
The Hong Kong Institute for Monetary and Financial Research (HKIMR) published two reports on June 25th, exploring the potential impact of DeFi and the metaverse on the financial sector.
The DeFi report highlighted the sector’s explosive growth, with the market capitalization surging from $6 billion in 2021 to over $80 billion in 2023. The report emphasizes that “DeFi’s potential cannot be ignored.”
Despite its impressive growth, DeFi remains largely untapped, with over 70% of surveyed crypto businesses yet to explore the technology.
The report acknowledges challenges in governance, compliance, and vulnerabilities within DeFi, but remains optimistic about its potential to provide innovative financial services with faster transactions and greater automation.
The metaverse study revealed a more cautious outlook. While local financial institutions expressed interest, over half of respondents, including some metaverse service providers, were skeptical about its future potential.
However, a segment of Hong Kong’s fintech sector is actively embracing the metaverse. According to Enoch Fung, CEO of the AoF and executive director of the HKIMR, “DeFi and the metaverse, along with virtual assets and Web3 developments, present exciting opportunities for Hong Kong’s financial services industry.”
