Hong Kong Doubles Down on AI, Crypto to Retain Financial Edge
Hong Kong is doubling down on its commitment to technological innovation, with a particular focus on artificial intelligence (AI) and cryptocurrencies.
The Hong Kong Monetary Authority (HKMA) unveiled a comprehensive strategy to position Hong Kong as a global financial hub, capitalizing on these emerging technologies, detailed in speeches on Monday by Paul Chan, Financial Secretary, and Christopher Hui, Secretary for Financial Services and the Treasury, at Hong Kong FinTech Week 2024.
To harness the power of AI, Hong Kong is developing a unified regulatory framework that will provide clarity and consistency for financial institutions. This framework aims to balance innovation with risk mitigation, ensuring the responsible development and deployment of AI technologies.
"Hong Kong's financial sector has what it takes to promote AI adoption – sizeable markets and rich scenarios," said Secretary for Financial Services and the Treasury Christopher Hui. "We will take a dual-track approach to promote development while addressing challenges."
Local universities, such as the Hong Kong University of Science and Technology, are actively developing advanced AI models tailored to the specific needs of the financial industry. These models will empower financial institutions to make data-driven decisions, enhance risk management, and improve customer experiences, Hui said.
Cryptocurrency Embrace
In addition to AI, Hong Kong is also embracing cryptocurrencies as a key driver of future growth. Hui said Hong Kong is extending tax breaks to include investments in virtual assets, making the city an attractive destination for crypto-related businesses. This move aligns with the city's broader strategy of fostering a conducive environment for emerging technologies, including blockchain and cryptocurrency.
"This move will further recognize its role for asset allocation," said Hui.
By offering favorable tax incentives, Hong Kong aims to attract global capital and talent to its burgeoning crypto ecosystem, he added.
Currently only three virtual asset trading platform operators – OSL Exchange, HashKey Exchange and HKVAX – are formally licensed by the SFC, though the regulator said it is streamlining the licensing process and expects to grant the first batch of formal licenses to deemed-to-be-licensed VATP applicants by the end of this year.