On 11 November, Hong Kong's Applied Science and Technology Research Institute (ASTRI) published its whitepaperon distributed ledger technology (DLT). The whitepaper was commissioned by the Hong Kong Monetary Authority (HKMA).
The release of the whitepaper coincided with the HKMA's Fintech Day, an all-day event marking the end of the inaugural Hong Kong Fintech Week.
Announcing the release of the whitepaper, Norman Chan, Chief Executive of the HKMA, said:
"While the whitepaper affirms the good potential of DLT for application in financial services, it also highlights a number of possible issues which need to be carefully dealt with if DLT is adopted by the banking sector. For example, the decentralised model may pose some challenges for constructing an effective governance structure and oversight mechanism.
Some legal issues have yet to be thoroughly examined, such as the application and enforceability of laws for the cross-border DLT models, mechanisms for handling liability and dispute resolution if there is no centralised party administrating the DLT platform, and compliance with personal data protection principles in relation to data sharing and perpetual storage. Also, traditional cybersecurity issues still apply to DLT, including denial of access attacks and other cyber attacks."
ASTRI is continuing to study DLT and will deliver more detailed findings from a number of the proof-of-concept trials, along with assessment on whether some of this work can be put into action, in H2 of 2017.
So, hardly a 'big bang' moment for DLT in Hong Kong but perhaps the popular maxim 'slow and steady wins the race' will prevail. And on the plus side, the number of legal and regulatory issues that need to be ironed out means that our Fintech Team is likely to be kept busy in 2017 and beyond!