Hong Kong’s top banking regulator, the Hong Kong Monetary Authority (HKMA), unveiled two FinTech initiatives today. The announcement was made at the Hong Kong’s annual Treasury Markets Association gathering by HKMA chief executive, Norman Chan.
Hong Kong’s FinTech Market Is Bitcoin Focused
While the announced initiatives are not specifically for Bitcoin startups, China’s FinTech scene, including the one in Hong Kong, is Bitcoin-focused. In July, the 2016 Top Markets Report of Financial Technology revealed that bitcoin is one of the three top focuses of China’s FinTech market. The report was produced by the U.S. International Trade Administration (ITA), a bureau within the U.S. Department of Commerce.
“Overall,” the report said, “the Chinese FinTech market is currently focused on payments, lending and bitcoin.”
Two FinTech Initiatives
The two initiatives are the FinTech Innovation Hub and a FinTech
Supervisory Sandbox, which the HKMA will set up. These initiatives are aimed at “spurring banks to embrace technology to make financial transactions safer, speedier and more convenient for consumers,” South China Morning Post reported.
The move should strengthen Hong Kong’s status as a growing FinTech hub. “While some of the largest banks have built their own laboratories, this new FinTech hub will cater for the big and small institutions alike,” Chan said, adding that, with this initiative, “the industry as a whole would be able to adopt new technologies more speedily and in a more collaborative manner.”
Many companies have innovative products and services, however, to offer them to the public requires an array of regulatory compliance and approvals. That’s why regulatory sandboxes exist, so that firms can test their FinTech solutions without having to comply with normal regulations. They afford FinTech firms special regulatory waivers for a limited period of time.
The HKMA is not the first regulator to consider introducing a regulatory sandbox. In June, the Monetary Authority of Singapore (MAS) proposed a regulatory sandbox for FinTech companies. In their proposal, MAS wrote:
“The regulatory sandbox will enable FIs [Financial Institutions] or any interested firms to experiment with innovative FinTech solutions in an environment where actual products or services are provided to the customers but within a well-defined space and duration.”
HKMA Statement About Bitcoin
Like most financial authorities that have spoken up about bitcoin and other cryptocurrencies in the wake of their popularity, the HKMA was no exception. The Authority clarified its position regarding digital currencies in February 2015 when it published a public warning about the trading of bitcoin and other cryptocurrencies. “Bitcoin and other similar virtual commodities are not regulated by the HKMA,” said an HKMA spokesperson. “Given the highly speculative nature of Bitcoin, we would like to remind the public to exercise extra caution when considering making transactions or investments with Bitcoin.”
Their warning was not made in vain when Hong Kong-based bitcoin exchange, Bitfinex, was hacked and 119,756 bitcoin, or approximately $72 million USD, was stolen. Nonetheless, the introduction of the two FinTech initiatives reaffirms the government’s enthusiasm for the potential of bitcoin and blockchain.
What do you think of Hong Kong’s FinTech initiatives? Let us know in the comment section below.
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