In 2015, the launch of Ethereum’s mainnet marked the beginning of a new era for blockchain technology—ushering in the age of smart contracts. From then on, blockchain evolved from merely a distributed ledger technology underlying Bitcoin to a platform carrying broader expectations such as decentralization and trusted collaboration.
Thanks to its natural alignment with the flow of capital, the traditional financial sector was among the first to take an interest in blockchain, exploring its use in streamlining payment settlements and clearing processes. A 2015 report by the World Economic Forum (WEF) noted that institutions such as Goldman Sachs, J.P. Morgan, the London Stock Exchange Group, Wells Fargo, and State Street all expressed strong interest in blockchain, particularly in its applications for settlement systems. By the end of 2017, IBM had launched blockchain collaboration projects across multiple sectors—including cross-border payments, education, food safety, identity verification, insurance, and shipping—and predicted that blockchain would increasingly impact various industries.
As IBM foresaw, the period between 2017 and 2021 witnessed a surge of blockchain innovation across industries. In 2018, PwC conducted a survey of 600 executives across 15 regions, with over 84% reporting that their companies had engaged with blockchain in some capacity. “Everyone is talking about blockchain, no one wants to be left behind.” However, many of these explorations were centered around “permissioned ledgers,” which mainly enabled data sharing and tracking among enterprises or partners. Due to limitations in existing digital infrastructure and the lack of robust blockchain governance, the technology’s full potential remained largely untapped.
“Governance” was once a taboo subject in blockchain circles. But over time, the community has come to realize that governance is not only critical for maturing applications, it is a necessary condition (or people have given up resisting regulation). Reports by the WEF (2020) and the Bank for International Settlements (BIS) (2022) both emphasized that for blockchain to reach maturity, it must go beyond technical breakthroughs and address non-technical factors such as standardization and regulatory frameworks.
As governance became the central theme, blockchain’s trajectory shifted from idealistic notions of “revolution” and “disruption” to a more evolutionary integration with existing institutions. The rebellious narrative was once again absorbed by the mainstream. After 2021, public attention returned to blockchain’s financial applications—specifically, tokenization. Tokenization refers to converting traditional assets (e.g., currencies, bonds, stocks) into digital formats that can be recorded and transacted on programmable platforms like blockchains. Unlike the unregulated ICO boom of 2017, today’s tokenization efforts—such as Central Bank Digital Currencies (CBDCs), stablecoin regulations in Hong Kong and the U.S., and real-world asset (RWA) tokenization—focus more on building atop the strengths of the existing financial system while emphasizing compliance and risk management. This represents “evolution,” not “revolution.”
Looking back over the past decade, although many industries enthusiastically explored blockchain for innovation, most applications remained centered on transparency and public ledgers, lacking truly irreplaceable functionality. In many scenarios, blockchain served more as a supplement to traditional databases than as a transformational force. For example, supply chain tracking (e.g., Walmart’s food traceability chain), public donation records (e.g., AntChain’s charity platform), and some governments’ electronic invoicing systems often used blockchain for added credibility, rather than to fundamentally reinvent processes.
At times, blockchain’s progress has felt like “scratching an itch through a boot.” While no one denies its value as a technological innovation, in many sectors—outside of gray markets, blockchain has not met core needs. Many seemingly cutting-edge attempts may inevitably end up as “innovation for innovation’s sake.” Today, although blockchain’s perceived potential once spread across all sectors, it has ultimately circled back to finance—where its utility and applicability appear most grounded.
In recent years, both upcoming stablecoin legislation and policy support for RWA tokenization show that Hong Kong aims to strike a balance between compliance and innovation, hoping to attract high-quality digital asset projects and solidify its position as an international financial hub—especially in offshore RMB, cross-border payments, and asset management. Yet this direction faces significant challenges. Take stablecoins as an example, the global market often follows a “winner-takes-all” dynamic, with USD-backed stablecoins dominating the consumer market. For Hong Kong dollar stablecoins to break through, they must establish a clearer differentiated positioning and supporting ecosystem, fully leveraging Hong Kong’s unique advantages as an offshore financial hub. If regulatory frameworks continue to mature and pilot projects progress under manageable risk, combining blockchain’s strengths with those of traditional finance could help Hong Kong secure a vital role in the global digital finance landscape—serving as both a bridge and a testbed.
Whether blockchain can break free from its current “scratching an itch through boots” dilemma in Hong Kong remains to be seen, but at least the path forward is becoming clearer.
The work described in this article was supported by InnoHK initiative, The Government of the HKSAR, and Laboratory for AI-Powered Financial Technologies (AIFT).
(AIFT strives but cannot guarantee the accuracy and reliability of the content, and will not be responsible for any loss or damage caused by any inaccuracy or omission.)
