Blockchain firms are increasingly dominating Hong Kong’s financial technology sector, with 39% of new firms launching in the country’s fintech industry last year operating with distributed ledger technology, or DLT.
According to Hong Kong’s Financial Services and Treasury Bureau, DLT represents an increasingly dominant share of the country’s new fintech firms year-over-year, up from 27% as of 2018.
A June 1 report published by Hong Kong’s treasury department has provided a detailed snapshot of blockchain’s accelerating growth within the territory.
Blockchain comprises the fastest-growing segment of the territory’s fintech industry, with 22 of the 57 fintech firms that have launched in Hong Kong over the past year operating with DLT.
WealthTech comprised the second-fastest-growing sector with 20% of new fintech firms, followed by Payments with 17%, and InsurTech with 9%.
Since April 2019, the report notes that the number of fintech businesses operating in Hong Kong has exceeded 600, including the issuance of eight virtual bank licenses and four virtual insurers.
Enterprises embrace blockchain
The report finds enterprise DLT solutions to comprise the largest sub-sector of the territory’s blockchain industry – representing 45% of Hong Kong’s distributed ledger firms.
Trading platforms for cryptocurrencies comprise 27% of Hong Kong’s blockchain sector, followed by digital asset custodians with 14%, and trade finance settlement with 9%.
The report asserts that blockchain is among artificial intelligence, big data, and cloud in comprising the stack of technologies underpinning the “tectonic shifts” observed in Hong Kong’s virtual banking sector. DLT is also being employed in several InsurTech initiatives intended to overhaul and modernize the territory’s insurance industry.
Hong Kong’s treasury also notes an acceleration in the embrace of fintech and blockchain technologies amid the coronavirus breakout, with the pandemic highlighting many of the efficiency savings and utilities offered by DLT.