Insights from Hong Kong
Lately Hong Kong introduced a new regulatory framework for crypto exchanges, enabled retail crypto trading and incentivized the local banking sector. Is Hong Kong the new crypto capital? Our VP of sales, Andrew Tu, wanted to see for himself at Hong Kong Fintech Week 2023
What were your expectations from Hong Kong Blockchain Week?
I wanted to see if there was reality to the marketing of Hong Kong as a renewed center for crypto in Asia and learn about the current Hong Kong ecosystem.
Is Hong Kong the new crypto center?
They’re definitely trying. It’s very nascent still in terms of giving out licenses and in terms of traditional finance participating in the ecosystem. KuCoin, OKX, Gate.io and Huobi are still applying for the HK VASP license. Traditional banks are not yet at the point of offering banking to crypto businesses and custodying crypto but some fintech/neo-banks are offering banking services to crypto companies.
What did you learn about the Hong Kong ecosystem?
The Hong Kong ecosystem is definitely still composed more of asset management, trading and financial services than builders. There are a lot of venture funds, family offices, and exchanges but still not many crypto projects.It’s not surprising and in-line with my expectations. Of course there are a couple bigger players like Animoca and some DeFi / Fintech projects like Infinity and Reap but it’s clear that the crypto ecosystem here is dominated by the finance side.
The government is definitely trying to support crypto builders. They’be built two organizations that invest in crypto startups, HKSTP and Cyberport. They both include a VC, an accelerator and provide grants for startups.
There’s not been so much news about this in the West but this year there was a huge, $1 billion scam in Hong Kong called JPEX, which put a dent in the reputation of crypto amongst retail in HK. It wasn’t a licensed exchange but it makes crypto seem illegitimate, similar to the FTX effect last year. We need to see how supportive the local government will be of Web3 following this.
What was Hong Kong Fintech Week like?
There was a lot of traditional finance presence at the conference. It was a mix of web3 and fintech, so HSBC, Standard Chartered, DBS (one of the few traditional banks in Hong Kong that accept crypto businesses) were there. A lot more suits than a typical crypto conference for sure.
Last time you were in Hong Kong was in 2019, how has it changed?
When I was last there, the city was embroiled in protests. Since then, Hong Kong has definitely become even more quiet, as strict Covid policies and political turmoil have driven a lot of expats and youth out of the city. It’s definitely not the same city it once was. It’s less vibrant, and there are noticeably fewer people in LKF and Central (the business and expat district), though some people are moving back in.
Tell us about the crypto side of HK Fintech Week
Animoca Brands was the crypto company that had the biggest presence at the conference and gathered a lot of its portfolio companies and subsidiaries in town for this event. Sandbox had a whole creator day, where I sawa lot of different games being built on Sandbox. I went to the TON demo day, RWA event, OKX VIP event (a meetup for OKX VIP clients and network) and a Cyberport event.
What did you think about the crypto gaming offerings?
Sandbox reminds me a lot of Roblox. The fact that Sandbox is an open world is very interesting. It feels like eventually something in the gaming sector will stick as long as people create something fun and create the right tokenomics. I don’t know if it will ever be decentralized, but having an NFT element and maybe having a token.
In the last two months you’ve been to Korea, Thailand, Indonesia and Hong Kong, what are your takeaways?
The consensus among Asians is that the builders in the west are the ones willing to be on the bleeding edge of tech, and the Asians are the practical ones, the ones using proven ideas and building consumer apps.
In Hong Kong it’s mostly service providers, traders, and financiers. In South Korea, crypto is an outlet for gambling because gambling is fully banned. Most of the Korean projects are games, and there are a lot of them. A bit of DeFi too. Nexon, which is one of the biggest gaming companies in Korea, has partnered with Polygon and a lot of other gaming companies in Korea are testing out crypto partnerships. If there ever is user adoption, I think it will come first from Asia with crypto gaming.
