The attitude and measures of Hong Kong financial regulatory agencies towards Blockchain technology

Recently, the Hong Kong Monetary Authority and the Invest Hong Kong jointly held a five-day Hong Kong Fintech Week event. This grand event attracted thousands of participants from around the world. During the event, leaders from regulatory bodies such as the Hong Kong Monetary Authority, the Securities and Futures Commission, and the Hong Kong Stock Exchange shared important insights on the Blockchain field and launched several related initiatives.

Blockchain-based Cross-border Trade Financing Platform

A subsidiary of Hong Kong Interbank Clearing Limited signed a memorandum of understanding with an agency under the People's Bank of China Digital Currency Research Institute, planning to conduct a proof of concept trial to connect Hong Kong's "Trade Link" platform with the trade finance platform of the People's Bank of China. This trial is expected to begin in the first quarter of 2020.

The "Trade Link" platform was launched in September 2018 by 12 major banks under the promotion of the Monetary Authority as a trade financing platform. This platform utilizes Blockchain technology to achieve the digitalization, encrypted sharing, and automation of trade documents, effectively improving the efficiency of trade financing.

The purpose of this connection between the two local platforms is to deepen cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area and promote the interconnection of financial infrastructure between the mainland and Hong Kong. This will help strengthen the sharing of financing information among financial institutions in both regions, provide more convenient trade financing services for enterprises in both areas, and may also facilitate Hong Kong banks in expanding their financing business.

Research on the Cross-Border Application of Central Bank Digital Currency

The Hong Kong Monetary Authority and the Bank of Thailand are conducting a joint research project named "LionRock-Inthanon" to explore the application of central bank digital currencies in cross-border payments. The project aims to facilitate the synchronized settlement of dual-currency foreign exchange transactions between banks in Hong Kong and Thailand. The relevant research report is expected to be published in the first quarter of 2020.

This project is based on the previous "Project Lion Rock" research conducted by the Monetary Authority, which confirmed the development potential of central bank digital currency in the field of cross-border payments. The goal of the "LionRock-Inthanon" project is to enhance cross-border payment efficiency, strengthen foreign exchange liquidity management, and reduce compliance costs through central bank digital currency.

The Hong Kong Stock Exchange's View on Blockchain Technology

The CEO of the Hong Kong Stock Exchange, Li Xiaojia, stated at the event that blockchain technology has the potential to redefine economic relationships. He pointed out that, in the era of the digital economy, data could become a new class of tradable assets. Li Xiaojia believes that China is in a leading position in terms of digitalization, which lays the foundation for establishing a blockchain-based economic governance system.

Other attending experts also expressed their views on Blockchain technology. Some believe that the potential of Blockchain lies in its simple, elegant, and intangible characteristics, and that innovation should become an indispensable part of daily life. At the same time, experts emphasized that the ultimate goal of technological innovation is to serve customer interests, rather than merely pursuing technological perfection.

New Regulations for Virtual Asset Trading Platforms

The Hong Kong Securities and Futures Commission announced its regulatory stance on virtual asset trading platforms during the FinTech Week, marking an important step for China in the regulation of Blockchain and cryptocurrency asset trading. The new regulations allow virtual asset trading platforms to apply for operating licenses, aiming to raise industry standards and prevent fraudulent activities.

The CEO of the Securities and Futures Commission, Ashley Alder, stated that the new regulatory framework draws on the standards of traditional securities and automated trading systems and applies them to current Blockchain technology. According to the new regulations, licensed trading platforms can only provide services to professional investors and must take insurance measures to ensure the safety of client assets.

This series of measures reflects the positive attitude of Hong Kong's financial regulatory authorities towards Blockchain technology, while also indicating their efforts to seek a balance between promoting financial innovation and maintaining market stability. With the implementation of these policies, Hong Kong is expected to establish a more完善的监管体系 in the Blockchain and digital asset fields, creating a favorable environment for industry development.