One in Four Hong Kong Adults Plans to Hold Crypto: A Growing Trend Amid Regulatory Advances

In November 2024, a survey conducted by the Hong Kong University of Science and Technology (HKUST) revealed that 25% of Hong Kong adults plan to hold cryptocurrencies, marking a significant 6% increase from the previous year. This surge in interest is accompanied by a high level of uncertainty, with 40% of respondents unsure about future crypto investments. As Hong Kong continues to develop its regulatory framework, residents show a strong preference for regulated exchanges, and Bitcoin maintains its position as the most favored cryptocurrency. However, interest in non-fungible tokens (NFTs) has declined, and public understanding of tokenized money remains limited.

• 25% of Hong Kong adults plan to hold crypto
• 6% increase from last year
• 40% remain uncertain
• Regulated exchanges preferred
• Bitcoin remains most popular
• NFTs see declining interest
• Limited understanding of tokenized money

The survey, which sampled 5,863 adults, sheds light on the current state of crypto adoption in Hong Kong. The rise from 19% to 25% in the number of adults planning to hold cryptocurrencies indicates a growing confidence in digital assets. However, the persistent uncertainty among 40% of respondents highlights the volatile nature of the crypto market, akin to the ups and downs of a rollercoaster. This uncertainty may be a natural response to the market’s fluctuations, but it also underscores the need for clearer guidance and education.

Hong Kong residents are increasingly favoring regulated crypto exchanges, with 20% more respondents feeling safer depositing their money into platforms that are under regulatory oversight. This preference comes in the wake of high-profile incidents like the collapse of FTX in November 2022, which has left many wary of unregulated platforms. It’s clear that Hongkongers are demanding a safer environment for their investments, echoing the sentiment, “Give us the rules, and we’ll play the game.”

Bitcoin continues to dominate the crypto landscape in Hong Kong, with over 80% of respondents expressing interest, a 7% increase from the first survey. It’s like the steadfast old uncle at family gatherings – always there and always appreciated. On the other hand, the hype around NFTs has cooled, with interest declining by 11% since the initial poll. It seems the NFT party might be winding down as investors look for more stable and promising opportunities.

The survey also highlighted the public’s limited understanding of tokenized money, which includes central bank digital currencies (CBDCs), e-HKD, stablecoins, and tokenized deposits. For those new to the term, tokenized money refers to digital representations of traditional currencies or assets on a blockchain. Unfortunately, 72% of respondents were unfamiliar with CBDCs, 65% with e-HKD, 61% with stablecoins, and a staggering 81% with tokenized deposits. It’s like trying to teach a new language with no Rosetta Stone – it’s just not clicking yet.

Hong Kong is not standing still in the face of these challenges. The city is actively working to establish itself as a global crypto hub, with regulatory initiatives playing a key role. In August 2024, the Hong Kong Monetary Authority (HKMA) launched the “Project Ensemble Sandbox,” aimed at testing tokenized money applications. This project focuses on four main themes: fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance. Additionally, Hong Kong has issued licenses to crypto exchanges and allowed companies to issue tokenized investment products, showing a commitment to balancing innovation with regulatory oversight.

Prof. TAM Kar Yan from HKUST emphasized the importance of this balance, stating, “We need to ensure that regulation does not stifle innovation but rather supports the growth of the virtual asset sector.” Eddie Yue from the HKMA echoed this sentiment, expressing optimism about the industry’s interest in pioneering innovative solutions through the Sandbox. Julia Leung from the Securities and Futures Commission (SFC) noted that the Sandbox launch exemplifies how innovation and regulation can work together to advance financial markets.

While Hong Kong’s regulatory efforts are commendable, there are potential challenges ahead. The city must navigate the delicate balance between fostering innovation and preventing regulatory overreach, which could stifle growth. Additionally, global economic conditions could impact the crypto market’s stability, affecting public confidence and adoption rates. As Hong Kong continues to push forward, it’s crucial to keep an eye on these factors to ensure the city remains a leader in the crypto space.

The HKUST survey also provided actionable recommendations for promoting the virtual asset sector, including supporting research and development in blockchain technologies, promoting global standards for interoperability, implementing stringent security measures, and launching educational campaigns to enhance public knowledge and awareness. These steps could help address the current gaps in understanding and uncertainty surrounding cryptocurrencies and tokenized money.

As Hong Kong continues its journey to become a crypto hub, the focus on education, regulation, and innovation will be key to overcoming the challenges and capitalizing on the opportunities ahead. The city’s commitment to these areas is a promising sign that Hong Kong could indeed lead the way in the global cryptocurrency landscape.

Key Takeaways on Hong Kong’s Crypto Adoption

• What percentage of Hong Kong adults plan to hold cryptocurrencies?

  25% of Hong Kong adults plan to hold cryptocurrencies.

• How has the interest in cryptocurrencies in Hong Kong changed since the last survey?

  Interest has increased by 6% since the September 2023 survey.

• What is the level of uncertainty among Hong Kong respondents regarding future cryptocurrency investments?

  At least 40% of respondents indicated uncertainty about holding cryptocurrencies in the future.

• Do Hong Kong residents prefer regulated or unregulated crypto exchanges?

  Hong Kong residents significantly prefer regulated crypto exchanges, with 20% more feeling safe depositing money into regulated platforms.

• Which cryptocurrency is the most favored among Hong Kong respondents?

  Bitcoin is the most favored, with over 80% of respondents showing interest.

• How has the interest in non-fungible tokens (NFTs) changed in Hong Kong?

  Interest in NFTs has declined by 11% since the first poll.

• What is the public understanding of tokenized money in Hong Kong?

  Public understanding is limited, with 72% unfamiliar with central bank digital currency, 65% with e-HKD, 61% with stablecoins, and 81% with tokenized deposits.

• What initiatives has Hong Kong taken to become a crypto hub?

  Hong Kong has issued licenses to crypto exchanges, allowed companies to issue tokenized investment products, and launched the “Project Ensemble Sandbox” to test tokenized money applications.