Hong Kong anticipates the continued growth of its fintech ecosystem, with blockchain, digital assets, distributed ledger technology (DLT), and artificial intelligence playing a central role in shaping its future. The city is home to over 1,100 fintech companies, including 175 blockchain application or software firms and 111 digital asset and cryptocurrency companies. This represents a remarkable 250% increase in blockchain firms and a 30% increase in digital asset companies since 2022, as highlighted by the Hong Kong Fintech Ecosystem report by InvestHK, a government department overseeing foreign direct investments.
Participants of the Hong Kong Fintech Ecosystem. Source: InvestHK
Exploring Deeper Fintech Revenue Streams
The expansive growth of Hong Kong’s Web3 industry is attributed to proactive government policies and an active licensing regime for crypto exchanges or virtual asset trading platforms. According to the report, revenue for the Hong Kong fintech market is projected to reach US$606 billion by 2032, with an anticipated annual growth rate of 28.5% from 2024 to 2032.
InvestHK, together with other authorities, surveyed 130 fintech companies operating in Hong Kong and found that talent shortage is a significant concern, cited by 58.8% of respondents, while access to capital was highlighted by 43.9%. Addressing these challenges will be vital for sustaining Hong Kong’s momentum to become a leading financial hub, especially as over 73% of surveyed fintech companies currently operate in the AI subsector, a stark contrast to the 41.5% focusing on digital assets and cryptocurrency.
China’s “One Country, Two Systems” Policy at Play
The InvestHK report further showcased Hong Kong’s advantage in leveraging China’s “one country, two systems” policy, which enables the city to maintain a free-market economy, unrestricted capital flow, and robust global trade relations, while simultaneously benefiting from its proximity to mainland China. Consequently, the Hong Kong government has been able to roll out various Web3 innovations such as a licensing regime, spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds, as well as the Hong Kong Monetary Authority’s stablecoin sandbox and tokenized finance integration.
Hong Kong Monetary Authority’s five-step ‘Fintech 2025’ strategy. Source: HKMA
In 2021, the HKMA unveiled a strategy aimed at establishing Hong Kong as a financial hub by 2025, which includes encouraging fintech adoption among banks, enhancing readiness in issuing central bank digital currencies at both wholesale and retail levels, upgrading the existing data infrastructure, increasing the supply of fintech talent, and formulating supportive policies for the fintech ecosystem.
As the fintech landscape continues to evolve in Hong Kong, addressing the challenges and leveraging unique advantages will be essential for the city to maintain its position as a leader in the global financial arena.
