Hong Kong's Financial Transformation: Can the Encryption Industry Be a Lifeline?

The recent blockchain conference held in Hong Kong has brought back the former prosperity of Lan Kwai Fong, and this grand event has also sparked people's thoughts on the financial future of Hong Kong.

Traditional finance industry faces a cold winter

In recent years, Hong Kong's traditional financial industry has faced severe challenges. According to data, the scale of IPOs on the Hong Kong Stock Exchange is expected to be only about 100 billion HKD this year, far below previous levels. Some analysts believe that the scale of ICOs for encryption projects may exceed that of IPOs this year, a trend that deserves attention.

The changes in Hong Kong's financial environment stem from various factors, including international capital flows and policy adjustments. However, the encryption industry, due to its particularity, has relatively low requirements for the environment:

• The team can adopt a distributed office model.
• Mainly through encryption payments for income and expenses
• Most decentralized projects operate within a compliance framework.

Government financial pressure intensifies

The financial situation of the Hong Kong government has continued to deteriorate in recent years. Affected by various factors, the government's reserves have shrunk by nearly half from their peak, leaving only about 600 billion. At the current rate of consumption, this reserve may only be enough to last for 2-3 years.

Unlike the Chinese and American governments, the Hong Kong government cannot solve the deficit problem by printing money. Under the fixed exchange rate system between the Hong Kong dollar and the US dollar, it can only make up for the fiscal shortfall by earning US dollars.

Other industry development hindered

Other major industries in Hong Kong are also facing difficulties:

1. The retail industry is experiencing severe contraction, and local residents tend to shop in nearby areas.
2. The attractiveness of the tourism industry is declining, and high-end consumers are turning to other regions.
3. Foreign trade mainly relies on transshipment trade from the mainland and faces challenges.
4. The real estate market is sluggish, making it difficult to support economic growth.

Encryption Industry: Hope and Challenges Coexist

Against this backdrop, the encryption industry has become an important direction for Hong Kong to seek economic transformation. However, whether it can inject vitality into Hong Kong's economy in the short term remains uncertain.

Currently, many projects are only registered or financed in Hong Kong, while actual operations still tend to favor large international trading platforms. Although the Hong Kong government is actively issuing exchange licenses, the liquidity of these licensed exchanges remains limited.

In the current thriving environment of decentralized exchanges (DEX), relying solely on local licenses to support centralized exchanges may need to be reconsidered.

Conclusion

The future development path of the financial industry in Hong Kong remains unclear. The encryption industry, although showing potential, still needs time to test whether it can become a new growth point for the Hong Kong economy. The government may need to rely more on market forces while focusing on maintaining a good foundational financial framework such as the linked exchange rate system.