Virtual Assets Report

FINDINGS AND OBSERVATIONS 15 14 Figure 8. Top Three Reasons for Holding Virtual Assets (Ranked by Importance) Figure 9. Top Three Reasons for Not Holding Virtual Assets (Ranked by Importance) 0% 0% 10% 10% 40% 40% 20% 20% 50% 50% 30% 30% 60% 60% The respondents who had held virtual assets were asked about their reasons for holding virtual assets. The results are presented in Figure 8, showing that the top three reasons cited were long-term investment, diversification of their overall investment portfolios, and the fear of missing out on the opportunity to make quick money. The top three reasons for not holding virtual assets were virtual assets’ being too risky, insufficient knowledge about virtual assets, and the belief that virtual assets are not properly regulated (see Figure 9). Interestingly, these were also the top three reasons selected by those who had not heard of virtual assets before and would not want to hold or were unsure about holding virtual assets in the future. Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 Phase 1 Phase 2 As a long-term investment Virtual assets are too risky To diversify overall investment portfolio I do not know enough about virtual assets Fear of missing out on an opportunity to make money quickly I do not believe virtual assets are properly regulated Phase 1 Phase 2 Phase 1 Phase 2 Most Important Most Important 2nd Most Important 2nd Most Important 3rd Most Important 3rd Most Important 22.3% 22.2% 22.7% 25.6% 17.4% 17.5% 21.7% 19.1% 16.1% 14.8% 17% 18.8% 14.4% 16.8% 16.4% 16.5% 17.8% 17.1% 27.7% 18.6% 19.5% 20.3% 18.8% 18.2% 16.3% 19.3% 15.7% 15.7% 18.6% 21.9% 14.6% 17.7% 15.7% 15.4% 14.5% 14.2% III. ATTITUDES TOWARDS VIRTUAL ASSETS INVESTMENTS The results showed a significant increase from Phase 1 to Phase 2 (12.1 percentage points) in respondents who would not want to hold virtual assets in the future. There was a drop of about six percentage points in those with a desire to hold virtual assets in the future. Overall, a large majority of the respondents either would not want to hold virtual assets in the future or were unsure about it (see Figure 10). We asked the respondents about the virtual assets they would be interested in holding and present the results in Figures 11 and 12. Among the types of virtual assets that the respondents would be interested in holding, Bitcoin was selected by 78.7% of the respondents in Phase 2 – an increase of 5.2 percentage points from Phase 1. The next two most popular options, Ether (19.7%) and NFTs (16.9%), were far behind Bitcoin. Interestingly, while stablecoins do not offer investment returns or diversification benefits, 12.4% of the respondents expressed interest in holding these tokens, highlighting the importance of regulating them.7 While the results showed a decrease in interest in most tokens between Phase 1 and Phase 2, NFTs experience the largest drop, at 7.5 percentage points. In terms of investment products, directly owned tokens and ETFs were the most preferred. With the approval of Bitcoin ETFs by the U.S. Securities and Exchange Commission,8 we may observe even higher interest in ETFs in the future. We also observed low interest in other tokens and coins (less than or around 5% in both Phases), consistent with the respondents’ lack of knowledge of these tokens. As Hong Kong’s aspiration to become Asia’s virtual asset hub will benefit from the circulation of non-major virtual assets, this result suggests that more education and research is required to educate investors. Figure 10. Respondents’ Desire to Hold Virtual Assets in the Future 0% 20% 40% 45% 50% 5% 25% 10% 30% 15% 35% I would like to hold virtual assets in the future I would not want to hold any virtual assets I am not sure at this point 7. Hong Kong Monetary Authority (2023, 23 December). Consultation on Legislative Proposal to Implement Regulatory Regime for Stablecoin Issuers and Announcement on Introduction of Sandbox Arrangement. https://www.hkma.gov.hk/ eng/news-and-media/press-releases/2023/12/20231227-4/ 8. U.S. Securities and Exchange Commission (2024, 10 January). Statement on the Approval of Spot Bitcoin Exchange- Traded Products. https://www.sec.gov/news/statement/gensler-statement-spot-bitcoin-011023 Phase 1 Phase 2