Hong Kong’s financial technology sector is being propelled forward by artificial intelligence (AI), blockchain, and the tokenization of assets, according to Xu Zhengyu, the Director of the Financial Services and the Treasury Bureau. Speaking on the ten-year anniversary of Hong Kong’s Financial Technology Week, Xu highlighted the ecosystem’s significant growth in both size and quality.

A Decade of FinTech Expansion

Over the past ten years, Hong Kong has seen its startup landscape triple, growing from approximately 1,600 companies to nearly 5,000 today. The number of dedicated FinTech firms has also steadily climbed to around 1,200. Xu attributed this expansion to government initiatives that encouraged strong participation from the private sector, including key declarations on digital assets and AI.

“These are quantitative changes,” Xu noted, “but we can also see qualitative changes as the ecosystem becomes richer and more mature.”

Real-World Applications Drive Growth

Xu explained that the current phase of development is focused on integrating these emerging technologies into traditional finance. He pointed to tokenization as a key example, where real-world assets like electric charging stations or property leases can be converted into investable products, creating new income streams.

“There are also pilot projects that look at how to turn long-term rental income into secure and authentic investment opportunities using blockchain,” Xu said. He emphasized that these are concrete examples of how FinTech is being implemented in practical scenarios, making markets more efficient and creating new opportunities for investors and businesses.

Navigating the Fallout from the JPEX Scandal

While celebrating the industry’s growth, Xu also addressed the challenges, particularly the fallout from the 2023 JPEX cryptocurrency scandal. The Hong Kong Securities and Futures Commission (SFC) accused the platform of operating without a license and misleading investors with promises of unusually high returns. The incident, considered Hong Kong’s largest virtual asset fraud, resulted in losses exceeding $190 million after the platform abruptly restricted withdrawals.

In response to the scandal, Xu acknowledged that the rapid pace of innovation often creates a gap in public understanding. He stressed the importance of continuous investor education to help the public navigate the complexities of new financial products and technologies.

“Whether it is daily investor education or the rollout of new financial products, there will always be differences in understanding across the market,” he stated. “That is why we must continue to strengthen education and awareness among investors.”