New Opportunities in Hong Kong's Financial Sector: The Rise of the Crypto Assets Industry

The holding of the Hong Kong Blockchain Conference has restored the vibrant scene of Lan Kwai Fong, marking the vigorous development of the Crypto Assets industry in Hong Kong. However, the rise of this emerging industry also highlights the challenges faced by Hong Kong's traditional financial sector.

In recent years, Hong Kong's traditional financial industry has encountered severe difficulties. According to data released by the Hong Kong Stock Exchange, this year's IPO scale may only amount to over 100 billion Hong Kong dollars. In contrast, the scale of ICOs for crypto assets is expected to surpass that of IPOs this year, demonstrating the immense potential of the encryption industry.

The changes in Hong Kong's financial environment stem from multiple factors. External factors include the withdrawal of capital from Europe and the US, as well as potential sanctions, while internal factors are more complex. However, the characteristics of the Crypto Assets industry make it less affected by these factors. Crypto projects typically adopt a distributed team model and mainly conduct transactions through encryption payments, resulting in a lower reliance on traditional financial infrastructure.

The financial pressure faced by the Hong Kong government is also increasing. Under the currency peg system that maintains the link between the Hong Kong dollar and the US dollar, the government needs to earn US dollars to make up for the deficit. Currently, government reserves have fallen to about 600 billion, and at the current rate of consumption, they can only be sustained for 2-3 years.

The performance of other industries is also not optimistic. The retail sector continues to shrink, and the decrease in mainland tourists has led to a decline in consumption. In terms of foreign trade, due to the lack of a manufacturing base, Hong Kong mainly relies on re-export trade from the mainland. The real estate market is also facing difficulties, making it hard to support economic growth.

In this case, the Crypto Assets industry has become a potential hope for the recovery of Hong Kong's economy. However, whether it can bring significant economic benefits to Hong Kong in the short term remains questionable. Currently, many crypto projects are only registered and financed in Hong Kong, while their actual operations tend to be conducted on other major exchanges.

The Hong Kong government has taken measures to support the development of the Crypto Assets industry, such as issuing licenses to several exchanges. However, global investors' recognition of these licenses still needs to be improved, and the liquidity of licensed exchanges is also relatively limited.

With the rise of decentralized exchanges (DEX), the trading volume of DEXs supported by mainstream public chains has surpassed that of many centralized exchanges. In this context, the strategy of relying solely on local licenses to support centralized exchanges may need to be reconsidered.

For the Hong Kong government, the top priority may be to maintain the linked exchange rate system while creating a favorable environment for the market, allowing emerging industries such as Crypto Assets to develop naturally. The future development path of Hong Kong's financial industry still needs further exploration and adjustment.