TLDR: Hong Kong’s Financial Secretary, Paul Chan, affirmed the government’s strong commitment to fostering fintech innovation and developing a robust digital asset ecosystem. This includes leveraging regulatory sandboxes, promoting AI applications in finance, and launching the Hong Kong Virtual Assets Listed Companies Association (HKVALA) to drive industry collaboration and compliant growth.
Hong Kong’s Financial Secretary, Mr. Paul Chan, delivered a pivotal speech at the Fintech Forum 2025, ‘Envisioning the Future of Banking,’ on August 28, 2025, underscoring the Special Administrative Region’s unwavering dedication to advancing financial innovation. Chan emphasized that embracing new technologies like blockchain and artificial intelligence (AI) is not merely an option but a necessity for Hong Kong to maintain its status as a leading international financial center.
The government’s approach is distinctly ‘pro-innovation and pro-tech,’ recognizing that these technologies are rapidly reshaping the financial landscape, enabling faster, cheaper, and more transparent transactions. While acknowledging the inherent risks, such as investor protection, cybersecurity, and financial security challenges, Hong Kong’s strategy is to welcome disruptive innovation while ensuring responsible risk management.
A key facilitator in this endeavor is the implementation of ‘regulatory sandboxes’ by financial regulators. These sandboxes allow innovators to test new technologies in a controlled environment, receiving timely feedback and refining solutions before broader market adoption. Notably, the Hong Kong Monetary Authority (HKMA) has introduced a sandbox specifically for generative AI applications and an incubator for distributed ledger technology over the past year.
Chan highlighted the dual mandate of Hong Kong’s financial regulators, who act not only as supervisors ensuring compliance but also as enablers shaping the future of finance. He cited the Securities and Futures Commission (SFC) as an example, which, beyond regulating digital-asset trading platforms, actively works to expand digital-asset products for trading and listing. The HKMA has also led by example, issuing two batches of tokenized green bonds worth HK$6.8 billion over the past two years, with preparations for a third batch already underway.
In the realm of digital assets, Hong Kong has positioned itself as a pioneer, building regulatory regimes that balance tech innovation with suitable guardrails. This includes the ‘Policy Statement 2.0 on the Development of Digital Assets in Hong Kong,’ the enactment of the ‘Stablecoin Ordinance,’ and ongoing consultations on over-the-counter dealing and custodian services. The guiding principle is ‘same activity, same risk, same regulation,’ ensuring a transparent, fair, and risk-based framework. The focus is on digital assets serving the real economy, with stablecoin licenses granted only to applicants demonstrating real-world use cases and sustainable business models.
Further solidifying its commitment, the Hong Kong Virtual Assets Listed Companies Association (HKVALA) was officially inaugurated on the same day. This landmark event signifies a shift towards ‘ecosystem collaboration’ in the digital asset industry, aiming to build a stablecoin regulatory innovation pilot hub and an institutional-grade digital financial infrastructure platform. Mr. Joseph Chan Ho-lim, Secretary for Financial Services and the Treasury, delivered the opening address at the HKVALA ceremony, emphasizing continuous optimization of the legal framework, expanding digitized products, advancing applications and cross-sector collaborations, and cultivating professional talent.
Artificial intelligence is a core focus, with Chan stating its immense potential to transform financial services through streamlining compliance, enhancing customer service, and improving credit scoring and risk management. A recent survey by the HKMA’s Academy of Finance revealed that 75% of Hong Kong’s financial institutions are already using or planning to use generative AI. The government’s ‘AI+’ strategy aims to embed AI across all economic sectors, attracting enterprises and talent, and encouraging cross-sector collaboration with financial services. A policy statement on the responsible application of AI in financial markets was issued last October, promoting adoption while addressing risks like cybersecurity, data privacy, intellectual property protection, and potential job displacement.
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Hong Kong also aims to expand its fintech solutions beyond its borders, with over 1,100 fintech companies already operating in the city. The Hong Kong Investment Corporation actively supports these firms in their overseas ventures, particularly in Southeast Asia and the Global South, contributing to financial inclusion and regional economic development. As Paul Chan concluded, ‘perilous peaks offer the best scenery,’ signaling Hong Kong’s determination to navigate risks and emerge as a global beacon of financial innovation and prosperity.
