A current report from the Hong Kong Institute for Financial and Monetary Analysis (HKIMR) has recognized decentralised finance (DeFi) and metaverse applied sciences as key to increasing the fintech sector.
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HKIMR, the research arm of the Hong Kong Academy of Finance (AoF), revealed two stories on June 25 relating to the influence the DeFi and Metaverse sectors can have on the nation’s fintech sector.
Based on Enoch Fung, CEO of the AoF:
The rising applied sciences of DeFi and the metaverse, that are intently related to the broader digital asset and Web3 developments, will probably current numerous alternatives for the monetary companies business in Hong Kong.
DeFi sector stays untapped
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The DeFi sector reportedly grew from a $6 billion market to over $80 billion in between 2021 and 2023. Per the HKMI, this explosive progress “cannot be ignored.”
With DeFi accounting for simply 4% of the general crypto sector, it has been flagged as an untapped market. Based on the report, greater than 70% of members within the research had been but to dip their toes within the sector.
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The HKMI highlighted that DeFi can doubtlessly allow new avenues in monetary companies. Liquid staking, flash loans, and automatic market makers had been among the many few named within the report.
Nonetheless, the report additionally acknowledged the assorted dangers concerned with DeFi, together with governance points, compliance challenges, and technological vulnerabilities.
Addressing these dangers was deemed essential for sustainable improvement.
General, the research remained optimistic in regards to the distinctive traits the sector gives. The report recommended creating centralised DeFi (CeDeFi) fashions to “ realise the benefits of both worlds.”
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The metaverse sector was additionally seen as integral to supporting Hong Kong’s digital asset (VA) ecosystem. The research noticed market members more and more participating with the expertise.
Nonetheless, 51% of these concerned within the research wager towards the metaverse’s future potential. The respondents cited very restricted use instances on this regard that could possibly be built-in into their day-to-day operations.
But 79% of the members acknowledged that integrating metaverse purposes would permit for extra participating branding actions. 33% stated the expertise may additionally enhance operational effectivity.
Person adoption and knowledge privateness points had been flagged as the first components holding again metaverse integration.
The report follows Hong Kong’s current efforts to manage the cryptocurrency buying and selling sector.
The Securities and Futures Fee (SFC) of Hong Kong has mandated registration for all cryptocurrency exchanges. The regulator will perform on-site inspections as part of the licensing course of.
The transfer got here in response to the rising instances of fraud and scams within the area. $400 million price of cryptocurrency property had been misplaced to such instances in 2023 alone.
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