Blockchain/Bitcoin Events

CBDCs and Virtual Assets Dominate Day One of Hong Kong Fintech Week 2022

The seventh edition of Hong Kong’s flagship fintech event Hong Kong Fintech Week (HKFW) 2022 kicked off this week, organised by the Hong Kong Monetary Authority (HKMA) with Invest Hong Kong.

The first day of the HKFW 2022 saw several announcements from key government officials, including HKMA’s Chief Executive Eddie Yue who gave the opening keynote.

Yue noted the “significant progress” of Hong Kong’s Fintech 2025 strategy which was rolled out in 2021, including progress in regtech, central bank digital currencies (CBDCs), and cross-boundary fintech cooperation.

The HKMA also announced new initiatives to spur fintech development in the city and shared the progress on existing initiatives.

CBDCs, green bonds and funding

This includes preparations for the possible issuance of e-HKD in the future following the recent publication of the Project mBridge wholesale CBDC pilot report and e-HKD position paper.

The HKMA is also piloting a tokenised government green bond issuance to test the use of distributed ledger technology to issue bonds in Hong Kong.

Additionally, HKMA is collaborating with Cyberport to pilot FSS 3.1, a new track of the Fintech Supervisory Sandbox (FSS) funding scheme to assist in the commercialisation of successful projects.

Eddie Yue

“We have been pushing boundaries by introducing new fintech initiatives every year since 2016. In this seventh edition of Fintech Week, a solid foundation has already been laid, and our initiatives have been budding.

Looking forward, we will remain open-minded and persistent to walk the talk, as well as take forward various initiatives to embrace innovation, aiming at elevating our city’s fintech development to new heights.”

Virtual asset sector and ecosystem

The Hong Kong government published a policy statement on virtual assets at the start of the HKFTW 2022 providing its stance on virtual asset service provider and related regulations.

The statement also shared the government’s three pilot projects to test the technological benefits of virtual assets and their applications in financial markets.

Separately, Sam Bankman-Fried, Founder of crypto exchange FTX, said during a HKFTW 2022 webinar that Hong Kong was well-positioned to be Asia’s cryptocurrency, blockchain and Web3 hub:

Sam Bankman-Fried

“If you look at what the crypto hubs will be in the world, I think the Bahamas looks like one of them, Dubai looks like one of them, but if you look at the East, it’s not as obvious.

It could be Singapore, could be somewhere like Busan in Korea, but I think there is a real chance it ends up being Hong Kong.”

China’s e-CNY CBDC

Governor Yi Gang of the People’s Bank of China (PBOC), in his speech, noted that the central bank is working with the HKMA and other monetary authorities on CBDC but stressed that privacy protection remained a top concern for the central bank.

China’s CBDC, also known as e-CNY, is mainly positioned as cash to meet the needs of domestic retail payment. In describing the PBOC’s e-CNY privacy protection measures, Yi Gang, said,

Yi Gang

“The PBOC ensures personal information security through advanced technology and strict management, with full adherence to consumer privacy protection laws and regulations.

Transaction-related data is encrypted for storage. Sensitive consumer information is de-identified to non-transacting parties. Entities and individuals are prohibited from arbitrary inquiry or information usage without rigorous legal authorisation.

It is also important to keep in mind that anonymity and full disclosure are not as simple as black and white. There are many subtleties in between. Therefore, we must strike a delicate balance between protecting privacy and combating illicit activities.”