Core Viewpoint - Hong Kong has launched a five-year fintech strategy, Fintech 2030, aimed at enhancing its position as a leading fintech hub through responsible advancements in artificial intelligence and tokenisation initiatives [1][4]. Group 1: Fintech Strategy Overview - The Hong Kong Monetary Authority (HKMA) plans to implement over 40 initiatives to integrate AI in finance, develop a financial tokenisation ecosystem, and improve data and payment infrastructure [1]. - Fintech 2030 represents the third phase of Hong Kong's fintech strategy, following the introduction of digital banks in 2017 and a focus on practical applications in 2021 [3][4]. Group 2: Key Initiatives and Goals - The primary goal of Fintech 2030 is to prepare Hong Kong for future developments in the fintech sector, emphasizing resilience and in-depth development [4]. - The first project under this strategy is expected to be the settlement of tokenised money market funds, likely to be launched by the end of the year [4][5]. Group 3: Tokenisation and Cross-Border Trade - The HKMA aims to establish a comprehensive settlement system for tokenised money market funds, allowing banks to use tokenised deposits and central bank digital currency for settlements [5]. - Discussions are ongoing with the central banks of Brazil and Thailand to utilize blockchain and tokenisation for more efficient and cost-effective cross-border trade transactions, particularly benefiting small and medium-sized enterprises [6].

Banking & Finance Industry: Key Perspectives - Modern banks are chartered by nation states, making them political realities as much as economic functions [1] - Nation states regulate banks for political purposes, influencing how banking systems evolve [1] - Chartered banks are outcomes of bargains between power coalitions within a nation, defining their powers, limitations, and loss-sharing arrangements [2] - Stablecoins, to succeed, must navigate the political landscape and coalition-building, as demonstrated by the STABLE Act [3] Stablecoins & Future of Banking - Stablecoins have the potential to unbundle traditional bank services by offering an alternative payment system that bypasses the Federal Reserve's Fedwire [4] - The technology behind blockchain and distributed ledgers can enable not only better medium of exchange systems but also new definitions of the dollar [5] - Incumbent banks are threatened by stablecoins because they can create payment system networks that sidestep traditional banking systems [4] - The Genius Act represents a shift where incumbent banks are trying to limit stablecoins and integrate them into chartered entities [3] Political & Economic Considerations - The Bank Policy Institute (BPI) is portrayed as an entity that uses its power to hinder progress that benefits citizens over banks [6] - The American Association of Retired Persons (AARP) is criticized for promoting policies that benefit older generations at the expense of younger generations [43] - The US government's fiscal policy and debt levels pose a risk of high inflation, potentially leading to a default if a blockchain-based unit of account is adopted [33][39] - The future of stablecoins and the financial system is contingent on political decisions, requiring vigilance and organized groups to advocate for the public's interest [61]

Investment Rating - The report does not provide a specific investment rating for the industry Core Insights - The OECD adopted the Common Reporting Standard (CRS) in February 2014 to enhance tax compliance and international tax cooperation through automatic exchange of financial account information [18] - Amendments to the CRS were adopted in August 2022, expanding its scope to include electronic money products and central bank digital currencies, and strengthening due diligence and reporting requirements [19] Summary by Sections Section I: General Reporting Requirements - Reporting Financial Institutions must report information regarding each Reportable Account, including account holder details and account balances [24] - The report must identify the currency of each amount reported [28] Section II: General Due Diligence Requirements - Reporting Financial Institutions are required to use reasonable efforts to obtain Tax Identification Numbers (TINs) and dates of birth for Preexisting Accounts [28] - The information reported must include the account balance or value as of the end of the relevant calendar year [28] Section III: Due Diligence for Preexisting Individual Accounts - Specific procedures are outlined for identifying Reportable Accounts among Preexisting Individual Accounts [29] Section IV: Due Diligence for New Individual Accounts - Upon account opening, a self-certification must be obtained to determine the account holder's tax residence [37] Section V: Due Diligence for Preexisting Entity Accounts - Preexisting Entity Accounts with an aggregate balance exceeding USD 250,000 must be reviewed [41] Section VI: Due Diligence for New Entity Accounts - New Entity Accounts must also follow specific review procedures to determine if they are held by Reportable Persons [40] Section VII: Special Due Diligence Rules - Additional rules apply for determining whether an account holder is a Passive Non-Financial Entity (NFE) [43] Section VIII: Defined Terms - Key definitions related to financial institutions and account types are provided to clarify the reporting framework [46][47]