HSBC summit: digital assets market at ‘tidal point’, Hong Kong best placed to drive it forward, bank’s global strategy head says
- The market is at its ‘tidal point,’ I can’t think of any financial centres better placed for this [than] Hong Kong,’ HSBC’s digital assets strategy chief says
- The city has established substantial regulatory frameworks for the market and scored key transactions, bank says
“The market really is at its tidal point,” said John O’Neill, the bank’s global head of digital assets strategy. “When we look back, we’ll say 2024 is the year this market really gets serious in terms of liquidity development. I can’t think of any financial centres better placed for this [than] Hong Kong.”
With legal certainty and regulation, the UK-based investment banker said Hong Kong has entered the next phase of development in the digital assets market, which is to achieve benchmark liquidity in both the primary and secondary markets.
“This is a market where people are open-minded,” O’Neill said during a panel discussion at the Global Investment Summit in Hong Kong organised by HSBC. “They are really engaged in this subject.”
The city has been at the forefront in Asia in experimenting with different forms of digital currency and facilitating the blockchain ecosystem, taking the lead in enhancing the role of fintech in the financial hub.
The Hong Kong Monetary Authority last month initiated the second phase of a pilot programme to explore more retail use cases for a central bank digital currency (CBDC) and a wholesale pilot to support interbank settlements using tokenised money. It also introduced a stablecoin sandbox, allowing companies to test cryptocurrency tokens pegged to the local currency.
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Hong Kong’s government completed the world’s first multicurrency digital bond offering of about US$750 million in February. The bonds were directly issued onto HSBC digital assets platform’s private blockchain. The HKMA’s Central Moneymarkets Unit and its external linkages with clearing houses have broadened the investor base and enhanced the debt liquidity.
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HSBC, the largest commercial bank in Hong Kong, has also introduced tokenised gold to its retail customers in a joint effort with the city’s government to make real-world assets available in digital form.
“That liquidity story we really feel we can bring on globally, and Hong Kong is the start with that development,” O’Neill added. “We think, in 2024, these kinds of assets will be as liquid as conventional assets.”
Yuval Rooz, co-founder and CEO of fintech firm Digital Asset, said utility is a critical part of the digital assets market.
“We are moving to a world that talks about the virtual world where every asset, whether it’s backed by something physical or pure financial asset, is going to be digital, front and back, all the way from issuance throughout its entire life cycle.”
“Only if it actually delivers utility,” he added. “If it doesn’t deliver utility, it will eventually die.”
