Blockchain/Bitcoin

Hong Kong Fintech Hub Cyberport Doubles Down on Blockchain Commitment

Hong Kong leading digital tech park Cyberport is doubling down on blockchain commitment, multiplying initiatives to support promising startups and foster entrepreneurship.

Throughout the years, Cyberport has promoted blockchain applications through a range of activities and programs, including the Blockchain and RegTech Speaker Series, held between August and October this year, as well as Hong Kong Blockchain Week, organized with NexChange, that will take place in mid-November.

Most recently, the digital tech park announced a new startup program called Block AdVenture for which it teamed up with industry leader R3 and fintech consultancy firm Forms Syntron (Forms HK). The program aims to help young startups validate their business ideas and accelerate their product-market fit through events, workshops, mentorship and access to investors.

Just scratching the surface

This year, blockchain is further moving away from experimental proofs-of-concept (PoCs) to closely becoming a reality. Companies from all industries are pursuing more significant investment for real business-ready solutions and Deloitte anticipates that diverse adoption will continue taking place this year and onward, notably in the financial services industry, but also in life science and healthcare, as well as farming and supply chain.

But for Florian M Spiegl, Chief Operating Officer of Hong Kong-based blockchain startup FinFabrik, though a lot of development has taken place over the past three years, we’ve just scratched the surface with blockchain.

“Blockchain and distributed ledger technologies (DLTs) have their own development cycles and now is still a great time to jump on the bandwagon,” Florian told Fintech News Hong Kong. “I believe we have not even seen a fraction of the innovation that will come out of this space in the next years, in financial services and other industry sectors.”

Decentralized finance and central bank digital currencies as key trends to watch out for

Florian’s company, FinFabrik, develops blockchain solutions for institutions in the asset management and trading space, serving banks, brokerages, and wealth management firms looking to upgrade their technology.

Although the startup mostly works with traditional financial institutions, Florian said the team is closely watching what the “reinventors” are doing, and one particular area he’s excited about is decentralized finance (DeFi).

DeFi refers an experimental form of finance that does not rely on financial intermediaries such as banks, brokerages and exchanges, and where financial functions are performed on blockchains.

“I watch the reinventors with great interest and we all know that some parts of financial services need to be disrupted. That’s especially relevant if you look at where we are in the current economic cycle and political balances globally, and the state of capitalism in general,” he said.

“While most of the activities in this sector are really just speculative bubbles at this point, it holds the great promise of maturing into something far more consequential and helps rebuild elements of finance from the ground up … There will be interesting and important things coming out of DeFi, no doubt.”

Echoing Florian, Adrian Lai, CEO of Liquefy, another blockchain startup from the Cyberport community, said he’s observed growing blockchain adoption over the past 12 months, not only in finance, but also other areas including supply chain, voting and digital identity. As digitalization intensifies on the back of COVID-19, more innovation will take place.

Adrian Lai, CEO of Liquefy

“Many traditional players are adopting and developing their own proprietary chains, recognizing the threat of disruption,” Lai told Fintech News Hong Kong. “As we enter the digital age, the reality is that disruptive technology will be part of the future and blockchain is one of those technologies that fall into that category.”

Founded in 2018, Liquefy has developed a platform that enables the issuance and distribution of tokenized securities backed by real assets. The startup started with real estate but will be expanding to other asset classes such as sports, venture capital funds, and other alternative assets.

In September 2020, Liquefy was awarded a broker dealer license in the United Arab Emirates (UAE) where it will be focusing on establishing a foothold, Lai said. Liquefy’s long-term goal is to become a full suite tokenization solution that connects Asia to the rest of the world, he added.

“The digitalization of alternative real world assets is a natural evolution of financial markets and the streamlining of processes enabled by technology,” Lai said. “There are numerous benefits that can be gained from tokenizing real world alternative assets, including captured operational efficiencies, fractionalization, disintermediation of processes, unlocked liquidity, and increased information transparency.”

Besides DeFi, another key trend to watch out for, Lai said, is central bank digital currency (CBDC).

“Undoubtedly, as a Hong Kong-based fintech company, we have been following Chinese developments in this space closely … [which, once fully launched,] will have profound geopolitical effects, [impacting] sectors beyond finance, especially for companies working in Asian digital assets space,” he said.

Blockchain, a key tech cluster in Cyberport’s portfolio

FinFabrik and Liquefy are part of Cyberport’s rapidly expanding blockchain startup community which comprises ventures operating in areas including fintech, logistics, esports and social enterprises.

As Cyberport incubatees, both Florian and Lai were unanimous that the program and tie-up with the digital tech park have allowed their two respective companies to gain access to a wide community and get some much needed exposure.

Florian Spiegl

“To be honest, we first thought we’d get some money from the program and then be on our own. The truth is that the most important aspect of Cyberport is being part of the community,”

Florian said.

“The Cyberport teams are very active in offering their support and constantly generate new ways to engage and offer activities that can help a company succeed … That also comes with the responsibility to give back as a company to the community whenever you can and support the next generation of entrepreneurs. I see that as another positive aspect of Cyberport.”

In addition to the Cyberport community and blockchain partners network, Lai said his startup has also benefited from the various programs provided by the digital tech park, including the Fintech Anti-Epidemic Scheme for Talent Development (FAST), which has provided Liquefy with financial support amid COVID-19.