Hong Kong’s FinTech sector triples in a decade as government pivots to AI and tokenized assets

The Director of the Financial Services and the Treasury Bureau, Xu Zhengyu, believes that AI, blockchain and tokenization are the future of Hong Kong’s fintech industry, as the Chinese special administrative region (SAR) celebrates a decade of steady growth in its FinTech ecosystem. 

The Director of the Financial Services and the Treasury Bureau, Xu Zhengyu, said that Hong Kong’s FinTech ecosystem has grown considerably in both size and quality in the ten years since the establishment of Hong Kong’s Financial Technology Week. 

A decade of FinTech development in Hong Kong

Speaking to the media after attending a morning radio program on November 8, Xu said the number of startups in Hong Kong has tripled over the past decade, rising from about 1,600 ten years ago to nearly 5,000 today.

Xu also pointed out that the number of FinTech firms has reached around 1,200, representing a consistent year-on-year growth. 

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

Xu gave credit to the Hong Kong government’s initiatives, saying that they supported this FinTech growth. The authorities issued two major declarations on electronic and digital assets, and one declaration on artificial intelligence, encouraging rapid responses and strong participation from the private sector.

AI, blockchain, and tokenization 

According to Xu, the current phase of FinTech development in Hong Kong is being shaped by artificial intelligence (AI), blockchain, and tokenization. 

He explained that many companies and financial institutions are now looking for ways to use these technologies in traditional financial products. For example, tokenization brings in steady income streams from things like electric charging stations or property leases that can be turned into investment products. 

“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. “These are very concrete examples showing how FinTech is being implemented in real-world scenarios.”

Xu stated that the future will likely be filled with more companies that are finding innovative ways to apply emerging technologies to financial services. He believes the adoption of AI, blockchain, and tokenized assets will not only make markets more efficient but also create new opportunities for both investors and businesses.

Still dealing with the JPEX crypto scam fallout

During his conversation with the media, the 2023 JPEX cryptocurrency case, in which the Hong Kong Securities and Futures Commission (SFC) accused JPEX of operating without a license and misleading investors, came up. 

The platform allegedly promised unusually high returns on digital asset products, which attracted thousands of local investors. Then, withdrawals were suddenly restricted, and many users found they could not access their funds. This incident led to losses exceeding HK$1.5 billion (about US$190 million).

It has been described as Hong Kong’s largest financial fraud involving virtual assets. Following the scandal, police made multiple arrests connected to the platform, including the influencers who had promoted JPEX. 

Xu was asked about the case’s implications for investors. He started by acknowledging that the rapid growth of FinTech also brings challenges. He noted that there is often a gap in public understanding of new technologies and financial products, which can lead to confusion or misuse.

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

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