Hong Kong: Embracing Crypto, AI to Drive Financial Innovation

Hong Kong's financial secretary, Paul Chan Mo-po, has reaffirmed the city's commitment to maintaining an "open and vibrant market" for cryptocurrencies, as it seeks to establish itself as a regional hub for the digital asset class. Speaking at the Consensus 2025 conference, Chan emphasized Hong Kong's dedication to fostering innovation in the Web3 ecosystem, highlighting the city's investment in related infrastructure and talent development.

Hong Kong's Cyberport Web3 network, a state-run business hub promoting digital asset innovation, has seen significant growth, now featuring over 270 blockchain firms. This expansion reflects the region's ongoing efforts to position itself as a center for financial innovation. Additionally, Hong Kong has proposed initiatives such as exempting crypto gains from taxes for hedge funds, private equity, and family investment vehicles, among other regulations.

Chan stressed the importance of maintaining an open, fair, balanced, and forward-looking regulatory approach to support the sustainable and responsible development of financial innovation, including Web3. The region's Securities and Futures Commission has issued nine crypto licenses since starting a licensing drive in mid-last year, with two Hong Kong-based crypto exchanges, PantherTrade and YAX, receiving operational licenses in January.

Looking ahead, Chan highlighted the intersection of artificial intelligence and blockchain as an "exciting development" on the horizon. He noted that AI's constant evolution and increasing application in finance will create more use cases, presenting both new opportunities and challenges. Hong Kong has established a clear policy on the use of AI in financial services and is working closely with the industry to monitor technology and market development, aiming to create a transparent supervisory framework.