Hong Kong Financial Secretary Paul Chan Advocates for Regulated Digital Finance Growth at APEC

Executive Summary

Paul Chan, Hong Kong's Financial Secretary, delivered statements at the APEC Finance Ministers' Meeting, affirming the region's commitment to fostering digital financial services while prioritizing investor protection and financial stability. Chan highlighted blockchain and artificial intelligence (AI) as key drivers for efficiency and financial inclusion. Hong Kong is actively pursuing cross-border cooperation and policy dialogue to navigate the evolving digital finance landscape responsibly. The city aims to balance innovation with robust regulatory oversight, positioning itself as a leading global hub for digital assets.

The Event in Detail

During his attendance at the APEC Finance Ministers' Meeting in Lima, Peru, Mr. Paul Chan engaged in discussions centered on digital finance. He articulated Hong Kong's approach to developing fintech and promoting inclusive finance, citing the utility of regulatory sandboxes in encouraging innovation. Chan underscored Hong Kong's robust and internationalized financial infrastructure, coupled with a balanced regulatory system, as conducive to cultivating a thriving fintech ecosystem. The overarching theme of this year's APEC FMM, "Sustainable + Digital + Resilient = APEC," aligned with Hong Kong's strategic focus on sustainable finance, digital transformation, and economic resilience.

Market Implications

Hong Kong's continued emphasis on a balanced regulatory framework for digital assets is designed to instill investor confidence within its burgeoning digital market. This strategic stance signals the government's sustained commitment to developing digital finance responsibly, potentially solidifying Hong Kong's position as a global crypto hub. The convergence of AI and blockchain technologies is already significantly impacting asset tokenization, a market projected to expand from $4.13 billion in 2025 to $10.65 billion by 2029, demonstrating a compound annual growth rate (CAGR) of 26.8%. This technological synergy enhances operational efficiency and automates compliance processes, with intelligent automation capable of reducing operational costs by up to 40% and accelerating service delivery by a factor of five. Hong Kong's proactive regulatory measures, including its licensing regime for Virtual Asset Trading Platforms and ongoing CBDC experiments, aim to capitalize on these advancements.

Expert Commentary

Hong Kong's authorities, including the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC), are undertaking concrete steps to realize their digital asset vision. Initiatives such as Project e-HKD+, Project mBridge, and a stablecoin sandbox are exploring central bank digital currencies, blockchain-based cross-border payments, and regulated stablecoins. The SFC is co-leading asset management-related pilots under Project Ensemble, an innovation sandbox for tokenized money launched by the HKMA in 2024, which seeks to enable seamless transactions of tokenized assets. These efforts are underpinned by the Government’s Policy Statement on the Development of Virtual Assets in Hong Kong, with an upcoming 2.0 statement affirming continued commitment.

Broader Context

Hong Kong is actively competing in the global race to become a leading crypto hub, alongside regions such as the United Arab Emirates (UAE) and Singapore. As of June 18, 2025, Hong Kong has granted 11 licenses under its Virtual Asset Trading Platforms (VATPs) regime, with efforts guided by the ASPIRe roadmap to address market fragmentation and build a resilient crypto ecosystem. Data from Chainalysis indicates Hong Kong leads Eastern Asia with an 85.6% growth in crypto activity. The city is also a significant participant in the mBridge project, a collaborative effort involving central banks from China, Thailand, the UAE, and the Bank for International Settlements Innovation Hub, focused on advancing low-cost and fast cross-border payments using CBDCs. Hong Kong's government has also issued two batches of tokenized green bonds, including the world's first government green bond issued by tokenization in February 2023, and a multi-currency tokenized green bond amounting to US$770 million in early 2024. These actions underscore Hong Kong's strategic position as a "super-connector" between traditional and emerging markets, promoting the regional digital economy and innovative technology.