Author: Saibu Baba
List order based on GFCI 2018 (but in no particular order on blockchain)
What makes a city an international financial hub? According to the Global Financial Centres Index (GFCI) (pdf), many parameters add up, including the general business environment, financial sector development, infrastructure, human capital, among others. From Shenzen to New York, financial centers spur innovation beyond imagination. They serve as the genesis of tech and financial startups, pioneers of the Fintech industry, and centers where human capital create economies within cities.
But when it comes to the blockchain, the distributed ledger technology that powers digital currencies and is set to change business, governance, global trade, remittance, supply chains, and medicine among others, the story is different. Becoming a blockchain center of excellence is largely dependent on adoption, research, education, the level of friendly regulations, and the possible springing up of startups. Nevertheless, the cities that rule the financial world are still doing a lot in the blockchain and cryptocurrency ecosystem. Here’s how.
It’s hard to find a big, world-class conglomerate that doesn’t have a presence in New York. Home to Wall Street, the motherland of the New York Stock Exchange, NASDAQ, some of the largest investment banks, U.S brokerages, birthplace and headquarters of some of the biggest fortune 500 and fortune 1000 companies, New York is undoubtedly a financial center that knows how to innovate. When it comes to the blockchain, the global city is not leaving it to the tech-oriented cities alone.
Beyond the Blockchain Week NYC event which brought many blockchain and cryptocurrency enthusiasts, startups, and developers together, New York has been home to many other conferences in the ecosystem, including Fintech World Blockchain & Tokenomics (February 2018), Crypto World Investment Conference (March 2018), Future of Fintech, and Blockchain Without Borders Token Expo 2018 among others.
Conferences aside, New York has some of the top three venture capital firms investing in the distributed ledger technology, including Digital Currency Group, IDG Capital, and RRE Ventures. As a result, blockchain firms in New York received investments of around $181.4 million last year. The city is also home to vibrant blockchain startups such as BlockStack, Republic, TradeBlock, Gemini, MediaChain, and many others.
With the New York City Economic Development Corporation highly interested in championing a blockchain environment in the city, New York is not leaving the blockchain ecosystem to tech-based cities alone and wishes to tap into the $7.7 billion expected to be spent in the industry by 2020.
Canary Wharf, Morgan Stanley, KPMG, and many other big conglomerates come from London. The city is a world-class financial hub, a place where 40% of the world’s foreign equities are traded, 75% of Fortune 500 companies have offices here, the London Stock Exchange is the largest and most international stock exchange in Europe — and when it comes to the business world, London boasts of the most internationally diverse executive community. It’s no doubt the city is a financial center, and when it comes to the blockchain technology, London may be a little above New York…?
London has been a host of many blockchain and cryptocurrency conferences, including the Blockchain International Show, World Blockchain Forum, London Blockchain Week, Finovate Europe, 2018 Crypto Investor Show, among others. Beyond these conferences, London’s friendly regulations, a strong judiciary, and an access to startup capital positions the city as the next global blockchain hub.
Though the All Party Parliamentary Group on Blockchain was created just in January 2018, the informal institution has already attracted some members of the House of Commons, and other members from both houses. The Big Innovation Centre, Deep Knowledge Analytics, and DAG Global released a report on the U.K’s blockchain potential, showing that the country could become a global hub for the distributed ledger technology as early as 2022. With London being at the center of affairs when it comes to finance and business in the country, the city would be a major player in the UK’s blockchain future.
London’s Financial Conduct Authority is friendly towards blockchain, making it a great city to register and run a blockchain startup. In 2011, Blockchain, provider of the most widely used Bitcoin API, 26 million plus wallets, which also handles more than $200 billion in transactions was born in London. The city is also home to some of the sexiest and most successful blockchain startups, including MedicalChain, BlockVerify, Electron, Credits, and Blockvue among others.
With the blockchain set to transform many industries, London is not betting all in the financial and service provision sectors and is now researching into distributed ledger solutions.
The southeastern China territory Hong Kong is a global financial hub, a major port, and an international shopping destination. The territory has the largest RMB clearing center in the world, second largest exchange market in Asia and fourth largest worldwide, and in 2017, was the second largest investor and host on FDI stock after the U.S, as well as the highest degree of economic freedom since 1995. But what has this financial superpower got to show when it comes to blockchain technological advancement?
From trade finance and international banking to real estate and regulatory oversight, Hong Kong, undoubtedly, is already one of the world’s blockchain hubs. In their annual report in June this year, the Hong Kong Securities and Futures Commission (SFC) said they will “keep a close watch” on ICOs and cryptocurrency. According to the commission, the ecosystem comes with risks and they will “intervene when appropriate”. In other areas, the agency that plays a central bank role in the region the Hong Kong Monetary Authority (HKMA) has had a partnership with the Singapore Central Bank to enhance global trade finance between the two financial powers.
The Hong Kong government has also shown its plans towards the blockchain technology, announcing in November 2017 a blockchain-based trade finance mechanism as part of the Belt and Road Initiative of China. Additionally, the HKMA has also partnered with Abu Dhabi Global Market (ADGM) for an opportunity to develop distributed ledger solutions.
Hong Kong has welcome some big cryptocurrency and blockchain players. Apart from some emanating from the region, others are setting up their operations there because of the not-so-tight regulation towards blockchain and cryptocurrencies. For instance, the Japanese messaging giant LINE set up a $10 million Hong Kong blockchain fund, as has BitMEX crypto exchange rents expensive offices in the region.
The territory is home to some cool blockchain and cryptocurrency startups and projects, including Coinsuper, CryptoBLK, BlueMeg, GateCoin, BitSpark, as well as many other projects yet to be launched. The region has also been host to many conferences, including the Toke2049, CoinGeek Conference, Blockchain Summit Hong Kong, and many others.
The regulatory environment exhibited towards cryptocurrencies and blockchain, as well as the recent easing of immigration requirements for blockchain talent coming to Hong Kong means the region is ready, perhaps more ready than all those on this list — for blockchain innovation.
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