Blockchain or distributed ledger technology (DLT) firms have been dominating Hong Kong’s startup sector.
Last year, enterprise DLT and crypto-assets exchanges were ranked the most popular sectors in Hong Kong’s Fintech industry. This, according to a report from the Financial Services and Treasury Bureau which revealed that blockchain startups accounted for nearly 40% of the 57 Fintech firms that established operations in Hong Kong in 2019.
The rise in DLT-focused companies has come after the Special Administrative Region of the People’s Republic of China (HKSAR) decided to introduce new policies that aim to make blockchain tech development a key focus area or priority.
The report confirmed that enterprise blockchain firms were the most popular, as 45% of new companies are focused on developing applications for large businesses. Digital currency trading platforms accounted for 27% of all blockchain-related firms in Hong Kong.
Cryptocurrency custodians and trade finance firms accounted for 14% and 9% of the region’s blockchain startups, respectively. Only 5% of the firms are considering launching security tokens, the report revealed.
Blockchain or DLT-focused companies now account for a much larger share of Hong Kong’s Fintech startup sector. They only represented 28% of the region’s financial technology industry back in 2018. This significant growth may be attributed to the (generally) positive approach that the region’s government has taken towards blockchain initiatives.
When compared to most other jurisdictions, Hong Kong appears to have provided clearer regulatory guidelines for blockchain-related businesses.
Blockchain professionals have qualified for bonus marks or incentives when applying for Hong Kong’s Quality Migrant Admission Scheme (QMAS). The QMAS is a program that lets applicants settle down in the city before having to look for employment. This has reportedly motivated many blockchain specialists to move to Hong Kong.
In 2019, Fidelity strategically invested $14 million in the city’s BC Technology Group, which manages a cryptocurrency trading desk.
Hong Kong’s government partnered with Thailand’s officials in November 2019, in order to explore the development of central bank digital currencies (CBDCs).
Development of FInancial Technologies Hong Kong June 2020