Beijing’s sovereign digital currency push to boost Hong Kong’s fintech start-ups
- A bridge project between PBOC and HKMA could lead to opportunities for the more than 3,300 start-ups in Hong Kong
- Fintech needs to be where the financial hubs are, and if you are not in Hong Kong then there are only a few remaining options, says InvestHK’s fintech head
The People’s Bank of China has been working with the Hong Kong Monetary Authority on a bridge project that will link up the digital yuan with sovereign digital currencies in Hong Kong, Thailand and the United Arab Emirates. Photo: Reuters
As Beijing pushes ahead with a sovereign digital currency and a national blockchain network, Hong Kong’s fintech community is using the city’s role as a bridge between mainland China and the rest of the world to seize opportunities for innovation.
From left, Vishal Kapoor, Citi’s Hong Kong head of treasury and trade solutions, and King Leung, head of fintech at InvestHK. Photo: Edmond So
Another Hong Kong start-up, digiXnode Tech, which operates a marketplace for digital applications run on blockchain, this month launched its global portal connecting developers worldwide with the Beijing-led blockchain service network (BSN).
Signage for the digital yuan in a supermarket in Beijing. China has been at the forefront globally in the development of a central bank digital currency. Photo: Bloomberg
Cryptocurrency start-ups, on the other hand, fear that the city could lose out its hard-earned advantage, built upon a strong regulatory framework, to Singapore. Unlike in China, where cryptocurrency trading is banned, in Hong Kong a regulatory framework is being put in place to enable cryptocurrencies to coexist with central bank digital currencies.
This is because the city’s virtual asset regulatory regime, which bans participation by retail investors and allows only professional investors, is considered restrictive. This could stifle entrepreneurs’ desire to innovate in Hong Kong, said Alessio Quaglini, CEO of Hong Kong-based digital asset custodian Hex Trust.
A professional investor is defined under Hong Kong securities law as someone with a portfolio of at least HK$8 million (US$1 million). The Singapore regime for payment tokens does not have a ban on retail investors.
Still, with the city ranking fifth in terms of the density of high-net-worth individuals – one in very 125 Hong Kong residents have a net worth of at least US$5 million – InvestHK’s Leung said Hong Kong’s regime serves to balance investor protection and innovation.