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Saturday. 2 November 2024

Chainlink advocates blockchain finance at its first Hong Kong event

Chainlink’s SmartCon 2024 brings blockchain-driven finance to Hong Kong, showcasing tech collaborations and addressing regulatory challenges.

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The blockchain infrastructure company Chainlink made a strong case for blockchain-driven finance at its first Hong Kong event, SmartCon 2024. This year's two-day conference at the Kerry Hotel in Hung Hom saw over 2,000 people. It marked one of the Web3 gatherings Hong Kong's government actively brought to the city to solidify its position as a virtual asset hub. The event, a part of Hong Kong's larger FinTech Week, aligned with other major discussions at AsiaWorld-Expo about the future of finance driven by Web3 and blockchain.

Hong Kong's push for blockchain in finance

Joseph Chan Ho-lim, undersecretary for financial services and the treasury, delivered the opening remarks, underscoring Hong Kong's potential as a bridge between virtual assets and traditional finance. Despite some momentum slowing this year, Chan affirmed the city's commitment to the field: “Hong Kong is uniquely positioned to link virtual assets to traditional financial instruments.” He praised Chainlink's recent technological progress, particularly its cross-chain interoperability protocol (CCIP), which has begun to gain traction among traditional finance institutions.

Chainlink advocates blockchain finance at its first Hong Kong event
Image credit: MeHongkong

Chainlink has collaborated with Swift, the Society for Worldwide Interbank Financial Telecommunication, for several years to facilitate blockchain transactions on Swift's global financial messaging network. Next year, banks will trial digital asset transactions over Swift, a notable step in merging blockchain and traditional systems.

Chainlink co- Sergey Nazarov highlighted the progress in connecting payment flows like Swift with blockchain networks. He noted that central banks are becoming more receptive to integrating their blockchain systems, stating, “I think, in the end, it'll be a mix of interconnected central bank chains and existing payment systems like Swift working together.”

Financial landscape shifts amidst geopolitical developments

Blockchain-based finance has come under fresh scrutiny this week due to concerns over its potential to bypass sanctions. Russian President Vladimir Putin referenced a cross-border blockchain project, mBridge, involving the central banks of Hong Kong, mainland China, Thailand, the United Arab Emirates, and Saudi Arabia. He suggested that similar technologies could be used to evade international sanctions, prompting central banks to consider halting the project.

The Bank for International Settlements (BIS), which initially supported the mBridge project through its Innovation Hub in Hong Kong, confirmed it would step back from the initiative. At the Santander International Banking Conference in Madrid, BIS General Manager Agustin Carstens clarified that the departure needed more political motivation. “The BIS is leaving the project not because of political considerations but because it is now at a point where the partner banks can continue independently,” he stated.

Unlike mBridge, which operates as a single blockchain, Chainlink's system allows multiple blockchains to connect, facilitating transactions across different networks. Nazarov emphasised that Chainlink's system includes mechanisms to verify identities and avoid usage by sanctioned entities. “We have systems that work with various identity platforms, but these external systems also need to be reliable,” he said.

Collaborations and regulatory challenges

This year's SmartCon saw sponsorship from several blockchain innovators, including 1inch, a decentralised finance aggregator known for finding optimal cryptocurrency exchange rates. Inspired by Bruce Lee's famous “one-inch punch,” 1inch announced a collaboration with Lee's family to celebrate his legacy.

In light of regulatory challenges, 1inch's CEO Sergej Kunz highlighted the importance of legal compliance. “You can't regulate decentralised platforms the same way as centralised exchanges,” he said, stressing that 1inch consults legal experts to ensure compliance. Kunz also advocated for increased collaboration within the Web3 community to establish compliant frameworks.

Chainlink advocates blockchain finance at its first Hong Kong event
Image credit: MeHongkong

Chainlink's Nazarov shared a confident outlook, pointing to financial institutions' inevitable integration of blockchain technology. “Eventually, large institutions will have to use blockchain,” he explained. “When more assets go on-chain, they'll have no choice but to interact with them. It'll be as essential as using email to communicate with clients.”

Chainlink's SmartCon 2024 reinforced Hong Kong's ambition to bridge virtual assets and traditional finance by setting the stage for significant blockchain finance discussions. As Web3 and tokenisation continue to gain attention, blockchain technology stands poised to reshape the financial sector despite its regulatory and geopolitical challenges.

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Emma Job
Emma Job
Emma is a news editor at Tech Edition. With a decade's experience in content writing, she revels in both crafting and immersing herself in narratives. From tracking down viral trends to delving into the most recent news stories, her goal is to deliver insightful and timely content to her readers.

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