Part 1: State of Hong Kong Blockchain Regulation (Government Press Release)

By Matthew Lam   May 31, 2019 4 Min Read

This is a press release by the government of HKSAR. It is split into two articles for editorial purpose.

Following is a question by the Hon Charles Mok and a written reply by the Secretary for Innovation and Technology, Mr Nicholas W Yang, in the Legislative Council today (May 29):
 In the "Hong Kong Smart City Blueprint", the Government has proposed promoting Fintech initiatives and exploring the application of distributed ledger technology (DLT) in different areas, such as trade financing and cross-boundary remittances. Blockchain technology (BCT) is a type of DLT.  In October last year, the Hong Kong Monetary Authority (HKMA) launched, in collaboration with 12 local banks, the eTradeConnect, which uses BCT as the backbone to facilitate trade settlement and financing. Furthermore, the application of BCT in supervisory and regulatory technology and other industries (e.g. Smart Contracts of the insurance industry and information authentication system) has gained increasing popularity. It has been reported that the governments of a number of places are currently examining and allocating resources to the application of BCT in public services, in areas including identity authentication, anti-counterfeiting, and enhancement of the security of information system and data, with a view to improving the transparency in the processing of information and the efficiency of public administration, as well as saving in public expenditure. On the other hand, the application of BCT is not yet subject to regulation under the existing legislation. In this connection, will the Government inform this Council:

Question 1
Will the Government inform this Council of the operation of eTradeConnect since its launch, including (i) a breakdown of the registered local banks and enterprises (set out by enterprise scale), and (ii) the number of cases in which trade transactions have been completed successfully through eTradeConnect and the amount of money involved; the follow-up actions taken after the HKMA and the Monetary Authority of Singapore exchanged a Memorandum of Understanding, and the work progress achieved in connecting with the relevant platform in Singapore?


According to the information provided by FSTB, the eTradeConnect is fully funded by a consortium of 12 major banks in Hong Kong under the facilitation of the Hong Kong Monetary Authority (HKMA). Since the implementation of the platform is still at initial stage, it is premature to announce the specific registration and transaction numbers. Based on the feedback collected from users, banks have started the platform enhancement work, including enhancing its functionalities, preparing to connect the platform to different trade participants and overseas platforms, etc. The next round of customer acquisition will commence after the completion of the related enhancement work.

Since the signing of the Memorandum of Understanding between the HKMA and the Monetary Authority of Singapore (MAS), the two authorities have discussed for several times the operation model and technical details of the "Global Trade Connectivity Network" and reached a consensus to some degree. The HKMA and MAS are jointly working on the preparation work to identify a suitable solution provider. The HKMA will announce more information in due course when available.

Question 2
Will the Government inform this Council whether it will, by drawing reference from the relevant studies and trial schemes of other advanced places, assess the potential of BCT in enhancing the efficiency of public services, as well as launch BCT trial schemes in areas such as handling of tax returns, land registration, voting and issuance of various types of identification documents?

Question 3
Will the Government inform this Council whether it will formulate strategies aiming at promoting a keen interest of applying BCT within the Government (e.g. requesting government departments to submit plans, objectives and timetables for trial uses of such technology, as well as formulating performance indicators); if so, of the details; if not, the reasons for that?

Response for Q2 and 3
As the Government understands, the adoption of blockchain technology in public services is still at the exploratory and initial stage. The Office of the Government Chief Information Officer (OGCIO) commenced in end 2018 a pilot application of blockchain technology project to explore the applicability and benefits of adopting blockchain technology in government services. The OGCIO is discussing with four departments (the Intellectual Property Department, the Companies Registry, the Environment Protection Department and the Department of Health) on the implementation of pilot projects in areas including the transfer of intellectual property ownership, change in registered company information, etc. These pilot projects will be completed in phases from end 2019 to 2020.
The results and experience of the pilot projects will help government bureaux and departments (B/Ds) consider adopting blockchain technology in their services, on matters such as the Internet connection speed requirements for handling a large quantity of transactions, the corresponding design and measures for maintaining information security, etc.
In addition, through the recently established Smart Government Innovation Lab, the OGCIO will invite the industry to submit technology solutions and product suggestions, including the adoption of blockchain technology, that can address the service needs of and challenges being faced by B/Ds. The OGCIO will also arrange proof-of-concept trials and technology testing for suitable solutions to help B/Ds better adopt information technology (IT) in their businesses and services.

About the author

Matthew Lam   
I believe the true value of cryptocurrencies is the underlying blockchain technology. The development of CBDC, DeFi, blockchain standardization are the key trends to watch in 2020!

Like this post:
Read More
Relevant |   Latest