Interest in virtual assets, payments with a central bank digital currency, and Greater Bay Area (GBA) Blockchain infrastructure are three drivers that will transform Hong Kong into a global digital financial centre, said Adrian Cheng, CEO, New World Development, at a keynote during Hong Kong Fintech Week.
"The Hong Kong government, Invest HK and the SFC* have been jointly driving STO development through industry consultation," he said. "This is a game changer move."
Cheng explained that public Blockchain-based investment products, including security token offerings (STOs), could soon be legitimately offered to professional investors in Hong Kong."In fact, the introduction of the virtual asset service provider ordinance and regulatory framework in 2023 have already created a new wave of optimism and opportunities for the industry in Hong Kong," he noted.
More legislation is needed, however. According to Cheng, there is a golden opportunity to develop a one-stop platform supporting tokens such as security tokens, central bank digital currency and non-fungible tokens (NFTs).
"We have to push the boundaries beyond what current DeFi** custody can offer for utility tokens such as Bitcoin and Ethereum," he said. "To take up this challenge, regulations in Hong Kong would need to further evolve and expand beyond the current regimes of SFC Type 1 & 2 client asset holding licences and (the) trustee licence."
Cheng further shared that there is demand for a single wealth management platform that can manage both traditional and virtual assets. "Customers want a single platform to issue traditional securities or mint a security token under proper regulatory approval and investor protection," he shared. "And the same platform could also offer regulated trading services, margin financing, and secure products for income generation.
"Most importantly, customers could safely keep custody of traditional and virtual assets in one hybrid wallet, protected by insurance coverage and relevant regulatory licences."
*SFC stands for Securities and Futures Commission.
**DeFi refers to decentralised finance, an alternative to the current state of centralised finance, or TradFi (traditional finance).
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