Hong Kong Monetary Authority releases blockchain white paper: This is just the first step in the blockchain research program (white paper download)

The Hong Kong Monetary Authority (HKMA) has published a white paper on distributed ledger technology (full text download at CoinWenKu).

The HKMA, which functions as Hong Kong's central bank, released the white paper jointly with the Hong Kong Applied Science and Technology Research Institute (ASTRI).

About a month ago, HKMA and ASTRI teamed up to conduct research on blockchain applications to build a shared mortgage valuation system between the Bank of China and HSBC, as well as some other top banks in the region.

The HKMA is one of many central banks committed to exploring blockchain technology. In the past few years, central banks in countries such as Russia, Canada and the United Kingdom have been actively conducting research in areas such as electronic currency and document authentication.

The white paper details the concept of blockchain technology and comprehensively demonstrates several use cases of the technology under the collaborative research of HKMA and ASTRI. Based on the research of both parties, the end of the white paper describes blockchain as a tool, a tool with "huge potential".

The entire fintech industry, central banks in most countries, and regulators have realized that the potential of distributed ledger technology (DLT) is by no means limited to the processing of virtual currencies or related financial products. In fact, the biggest advantage of distributed ledger technology lies in the way its network participants transmit and update information, which is completed in a completely reliable, secure, and efficient environment, and has huge application potential.

Although the white paper generally takes a positive view on blockchain technology, the author still states that the technology always has risks from a regulatory perspective, and particularly emphasizes the possibility of public chains being used for money laundering.

There are risks associated with using such platforms, which should not be underestimated and include operational risks, cyber attacks and money laundering issues.

Looking ahead

Hong Kong officials said the release of this white paper is only the first step in their grand blockchain research plan.

Recently, HKMA President Norman Chan said at an event that the government plans to conduct more in-depth research on blockchain technology. ASTRI plans to release a follow-up report in the middle of next year to record the relevant research results and explore whether "some use cases are possible to be put into use."

(Norman Chan, Chief Executive of the Hong Kong Monetary Authority)

The Hong Kong government also established a FinTech Innovation Center at the same time as the release of the white paper. It is reported that the innovation center provides a testing environment for Hong Kong financial companies, startups and regulators to conduct follow-up research on blockchain technology.

The FinTech Innovation Centre is equipped with high-performance computing resources and professional talents from ASTRI. Banks, payment service providers, FinTech companies and the HKMA can brainstorm and test and evaluate new FinTech solutions in a safe and efficient manner.

President Norman Chan said that a number of financial institutions are expected to participate in HKMA’s mortgage valuation system in the coming months.