In this next episode of our series, “Crypto leadership & talent: Evolution of control functions,” part of The Heidrick & Struggles Leadership Podcast, Heidrick & Struggles’ William Bown and David Hui speak to King Leung, head of financial services and fintech at InvestHK, a department of the Hong Kong SAR government responsible for foreign direct investment that attracts and supports overseas enterprises and investors to expand and scale their business in Hong Kong. King shares his first exposure to the crypto and digital assets sector and what drew him to this space, and then discusses Hong Kong's relationship with the crypto industry: how that relationship is evolving, how Hong Kong is trying to find the right balance between stability and innovation, how the industry can both attract and develop talent and what kinds of digital asset organization are looking to come to Hong Kong. He also offers some insight into where Hong Kong is in its plans to develop central bank digital currencies (CBDC) and what specific skill sets and capabilities will be most important for future leaders in this space to help their organizations meet their strategic goals.

Below is a full transcript of the episode, which has been lightly edited for clarity.

Welcome to The Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of senior-level executive search and leadership consulting services. Diversity and inclusion, leading through tumultuous times, and building thriving teams and organizations are among the core issues we talk with leaders about every day, including in our podcasts. Thank you for joining the conversation. 

William Bown: Welcome to The Heidrick & Struggles Leadership Podcast. I'm William Bown, a partner in the Financial Services Practice in Heidrick & Struggles’ Hong Kong office, where I help to lead our regional efforts in financial technology, web3, and digital assets. I'm joined by my colleague David.

David Hui: Hi, everyone. I'm David Hui. I'm the regional managing partner for our Industrial Practice here in Asia Pacific and the Middle East. I am also the partner in charge of the Hong Kong office for Heidrick here in Hong Kong and also run our CEO & Board Practice here in Hong Kong.

William Bown: In today's podcast, we are excited to speak with King Leung. King is the head of financial services and fintech, as well as the cohead of carbon neutrality of InvestHK, a department of the Hong Kong SAR government responsible for foreign direct investment that attracts and supports overseas enterprises and investors to expand and scale their business in Hong Kong. Prior to joining the government, King had a diverse private sector background as a serial tech entrepreneur, angel investor, and fintech lecturer in Asia. He also served as visiting lecturer in FinTech at Institute for China Business of the University of Hong Kong in China, where he has an extraordinary exposure to the China fintech ecosystem. Thank you very much for joining us today.

King Leung: It's a great pleasure. Thanks for having me.

William Bown: To kick off this conversation, King, could you walk us through your first exposure to this sector and what drew you into this space originally?

King Leung: Well this is a long story, but let me give you a short one. Essentially, I started off in consulting, where my first major financial services client was Barclays Bank in the UK. The one thing that brought me back to Asia was from raising seed money from Credit Suisse in helping them to set up a data company. The managing director at the time, that gentleman had been very progressive-minded, and he felt that with the data from different pockets—not just the in-house Credit Suisse data, but I'm talking about like third-party external data—Credit Suisse would be able to paint what we called the customer profile today. So it was more about the preferences, the psychographics of the customers. They can sell more wealth management products to them. That was like 20 years ago. So I started a data company for Credit Suisse, in which I've been branching out in serving other companies, including in insurance, in consumer finance. That's what got me started. 

Later on, I also tried my hand on angel investment, where I try to invest into one insurtech company and which I thought that there are just so much inefficiencies in the insurance sector. So at the time I felt that that's a great, great place to be. But then at the same time, I realized that to be a successful angel investor, you have to have really deep pockets. So then I started looking and thinking about the broader picture. And somehow maybe this is my fate, I saw that the government was looking for somebody to head up fintech and I thought, well, that's a great, great place to be, to elevate my exposure and my understanding of the broader issues and perhaps I can sell part of my personal interest as an angel investor later on. So now I've been on the job for four years and this has been an extremely fulfilling experience. I just love what I've been doing.

William Bown: That's great. And how have your prior roles informed you in what you're doing now? What kind of leadership attributes do you think you need to show in your position, and how is the position challenged and got the best out of you?

King Leung: Well, first of all, from a functional skill set standpoint, I believe that I had quite a lot of diverse experience from before. As I mentioned, I've been working with clients in different segments, in wealth management, insurance, lending and so on. So I got a pretty good appreciation of the different aspects of financial services. At the same time, because I started several tech companies, the one funded by Credit Suisse was the first one. I started a few afterwards. So I also came from the entrepreneur background as a founder, so that actually gave me the more bonding and also credentials in which I'm able to connect quite well with many founders. Because again, I've been in their boats so I can empathize with them. So in a way that also allowed me to communicate much more effectively, understand what kind of needs would be helpful to them. So in a way, I think from a functional skill standpoint and also prior experience, that matches arguably almost like as perfect as it gets. 

Now, obviously now that I'm in government, that requires a different skill set and that is stakeholder management, because in government there are just so many stakeholders, the policy bureau, the senior officials, the regulators, the HKMA, the SFC. There are also the different investors. Some of them are related to the government. Some of them are from the private sector, the universities. The diversity of people and leaders I have to engage with to make sure that I'm able to address to the various needs, that require quite a lot of thinking, empathy and good planning too, to make sure that we don't step on toes. We can basically serve or serve them in a way that can meet their needs.

William Bown: Thank you. And just talking a bit about I guess what we're here to talk about today, can you share on Hong Kong's relationship with the crypto industry? What's the situation been on the ground historically? How has it evolved over time and what's new today?

King Leung: Yes, this is a big question. For the benefit of the audience, perhaps I can segment the journey into three phases.

Now, the first phase is the year 2018 to probably 2022. Basically Hong Kong had been quite progressive in which we were one of the first jurisdictions that launched some kind of framework and guidelines for the crypto exchange to do business in Hong Kong. Now at the time it has been opt in. Therefore for exchanges that decided not to apply for a license, they can still do business in Hong Kong. So Hong Kong has been pretty open-minded, but at the same time we would like to help the industry to differentiate themselves. For those players that want to go with the mainstream framework to give the extra layer of protection to the investors, they decided to apply for a license in which we had the two firms, OSL and HashKey, they have done that. But, of course, I think that's the period in which for a lot of other jurisdictions have been relatively more relaxed in which many firms operated without license. So that created the, I would say, regulatory arbitrage. Therefore, for firms that decided to go the so-called proper routes to apply for license, in all fairness, they were put in a more disadvantaged position because of a lot of the controls, the check and balances around them. And naturally, because Hong Kong has been very firm in a way of protecting investors, the exchanges are asked to segregate the investors assets away from theirs. Naturally, a lot of players that are in the sort of the global space, they decided not to adopt that approach before 2022. Now so that's, I would say, phase one. 

Stage two is when the government decided to announce the super welcoming policy stance towards the digital asset industry on October 31, 2022. From that point onwards to, let's say, end of May, so this is what I would categorize as phase two. During this period, this is also from the backdrop of several unfortunate incidents, such as the FTX debacle, the Three Arrows, the BlockFi, the Celsius alike. So that have created quite a lot of scary emotions, people lost money that they could not recover. In a way that also put Hong Kong in a spotlight that we've been setting firm protection of investors stance. So then a lot of players are now looking at Hong Kong as the gold standard. Several firms like the HashKey alike, they felt vindicated. But at the same time, to be honest, many players in the crypto space were skeptical that, well, mainland China banned crypto, so is it for real that Hong Kong is really opening up, for the exchanges and also crypto firms at large? So that therefore, the Hong Kong government together with the regulators and so forth, we've been launching the different programs in terms of giving approvals and different initiatives being launched in a way to not just talk the talk but walk the walk. We used actual projects to show to the world that we are serious about this. In the interest of time, I won't be too long winded on this. But let's just say that at the end of middle part of December last year, the CSOP, a Chinese asset manager, almost like the smaller version of Black Rock, they've launched the Bitcoin futures based and also Ethereum futures based ETFs. So that created quite a big response in the market. Not just so much about the launch of ETFs, crypto ETFs, which is first in Asia, but more importantly, the issuer is actually a Chinese firm. But that entity is based on Hong Kong under the Hong Kong regulation. So that sent a very strong message to the market of the one country, two systems. And then the other things would be like the government also issue tokenized green bonds in middle part of February this year. This is also the first in the world that the government ourselves, we are launching a green bond of 100 million US, but we tokenize them to show the world that we are doing it as opposed to talking about it. So this is like phase two. 

Now phase three is after June 1st, because June 1st is when the regulator, the Securities and Futures Commission, SFC, launched the enhanced version of the crypto exchange in which now they are opening up to retail. This also created quite a lot of attention, in media and in the crypto space. Of course, I think this is with some guardrails, in which the exchange is asked to go through those tests and there are different measures to ensure that is okay where you're opening up crypto for retail, but to the right retail investors.

William Bown: That was really helpful. Thank you. And just focusing on one of those innovations, the G7 recently met and discussed financial digitalization and developing a reliable, stable and transparent global payment system, as well as about sort of CBDC, central bank digital currencies. Could you give some insight to where Hong Kong is in its plans to develop a CBDC?

King Leung: Now, I think for folks who have been following the CBDC for some time, you might have come across different media coverage that the Hong Kong de facto central bank, HKMA, Hong Kong Monetary Authority, has been working very closely with People's Bank of China, the Central Bank of China, the Bank of Thailand, the Central Bank of Thailand, and also Central Bank of UAE, together with BIS, the Bank of International Settlement for a number of years on the CBDC research. They've been writing like white papers and publishing the results of their pilots and so forth. The first thing I want to say is that Hong Kong has always been at the forefront on CBDC research pilots with other major partners like BIS. So that's step one. 

Now step two is that actually HKMA, on the 18th May this year, so this is quite recent, they have launched this e-Hong Kong dollar, which is basically the Hong Kong CBDC in another pilot in which HKMA has invited 16 firms across different sectors - financial background, payment background, technology background to participate in the pilot. Now and pilot for what you may ask. Actually the CBDC from a technological standpoint, we have done enough work that we know that it should work. But then the question is whether or not the citizens or the SMEs, the large corporates would actually use it. It's the commercial use cases that HKMA care about. So that's why instead of just thinking how they do this, they felt that it's important they involved the private sector. So it's almost like a crowdsourcing of ideas. The pilot that they are now working on is essentially trying to test out different commercial use cases so that by the time that the pilot is seeded, then we know how they may play out in different parts of the society. 

William Bown: You talk a lot about innovation there. Broadly speaking, how is Hong Kong trying to find that right balance between stability, financial and regulatory and allowing innovation to thrive? How do you think that gets balanced out?

King Leung: The short answer is there are numerous things that we've done. I would broadly summarize them in three key approaches. 

The first is communication. Now, I think this may sound a bit cliché, but then this is so important because as the government we cannot possibly know everything. Obviously, we have a lot of respect for the industry practitioners, so that's why the particularly the current administration led by our financial secretary Mr Paul Chan, he has led numerous initiatives in which we invited the private sector in a closed door meeting setting so that we're able to talk freely about what the market participants see as opportunities, and what are the things that government can do so that to facilitate a more conducive environment. And then we just very candidly share with them about plan. For things that we don't know, we tell them we don't know but we'll work on them. So I think those kind of communications have given the private sector a lot of confidence that they feel that the government is open-minded, they understand our constraints. So for example, things like protecting investor interest is something that we need to do our job, but then we can find a way to allow the businesses to do business while protecting investors, then definitely we'll consider. So the communication is one.

Secondly, there are also different sandboxes at the regulators, the HKMA, the SFC, the insurance authority, so firms can basically try out different things at the sandboxes. This kind of structure mechanism has been around for a number of years. 

And third, HKMA for example, has a very progressive minded regulator. They've also been pushing the Regtech agenda because they recognize that while we are allowing and fostering more innovation, then things happen more quickly. Because you're talking about an AI driven, decision models and then you have people transacting online, so things are happening much more quickly. So doing compliance work manually probably wouldn't cut it. That's why the HKMA has been very progressive in encouraging the industry, mainly the banks, to adopt different Regtech solutions so that to help them to do compliance and regulatory compliance and monitoring in a much more efficient way. Those are the three approaches that I would like to highlight.

David Hui: King, thanks for that. I mean, that's very revealing as to what Hong Kong's doing. A big part of your role though, is almost being the spokesperson, the salesman for Hong Kong in this sector. So I'm curious, what are the typical things, topics or conversation pieces that people will ask you? Everyone's doing lots of things. How do they view Hong Kong?

King Leung: It's not just myself, not just in InvestHK, but it's really a concerted effort. To be honest, I think the world has gone through a lot in the digital assets. Last year was hard for a lot of people. So that people have heard the word that Hong Kong opens up. As I just mentioned, at first people were skeptical. Then the question was, well, is it for real? And then we assure them and say, look, now given how visible we are, we are all over the news, if we don't get the blessing from Beijing there's no possible way that Hong Kong can do this. So that's why that we do get the support from the leaders in the mainland. Now, but then to be a bit more rational, why would mainland allow Hong Kong to do this? That's why this is where I would like to elaborate, which is also what I've been sharing with a lot of friends and partners around the world. Now, first of all, we think about why crypto was banned in the first place in the mainland. That is because of the fear of capital outflow. This is like open secret. Everybody understands this. Now, but then we think about the nature of Hong Kong as an international financial center. Hong Kong has always had this free flow of capital anyway, so the fear of capital outflow simply doesn't apply to Hong Kong. This is point number one. 

Now, secondly, we think about the one country, two systems. Last year it was the 25th anniversary of Hong Kong returning to the mainland. So perhaps we want to send a message to the world that, that formula still works, still applies. So it's actually again, it's not about talking the talk, is walking the walk. By allowing Hong Kong doing this, again, this is not from the Beijing leaders. It's just these almost like the general consensus among the business community. They felt, well, this is great. This is a great way to show that Hong Kong does operate differently with our own independence, in our regulations. So these are the reasons that it's not just, trust me, but these are things that make sense.

David Hui: So based on everything that you've been doing, and when you look at it today, what are the kinds of digital asset organizations that are looking to come to Hong Kong? And when they evaluate Hong Kong, what do you think is sort of front and center for them in terms of picking Hong Kong versus other destinations or jurisdictions?

King Leung: Well, the short answer is, almost the entire value chain of the digital asset space that have been talking to us, are now either already in Hong Kong or in the process of coming to Hong Kong. For decentralized exchanges, they would like to shore up the accounted amount the investors and shareholders and so forth. They would like to get a license from a jurisdiction that get the respect. Because of the IFC status of Hong Kong, the license from Hong Kong means a lot. And particularly last year when the whole world was upside down, Hong Kong was quite okay.

So that really put Hong Kong on the top of the list when it comes to decentralize exchanges. And the firms operating brokerages and so forth who require license, they then now come to Hong Kong to get a license. So exchanges, the prime brokers, those are the first wave. But then of course, now that the big boys are coming in, the other firms that serve these players are also coming in. Players like custodians, the market makers, the Web3 funds and or funds that specialized in blockchain and digital assets, they're also coming in because they feel that they want to be in the center of the action. 

David Hui: So it's the full range. From our perspective, our particular interest obviously is around talent and people because a lot of what you're talking about is relatively newer, and the talent in the space is very mobile, that was what we see a lot of. Clearly the government here is very aware of that, and the admission scheme for talent technology selection is a very important tech task. I want to get your views on how that's working. What you're learning from that? Is it getting the right kind of talent?

King Leung: Well, the short answer is absolutely. Let me answer your question in two ways. First, just now we talk about the different types of digital asset related firms coming in. And naturally, when the exchanges, the foundation are coming in, they need developers. That's why for certain firms, they have already moved some of their developers to Hong Kong via the various talent schemes. They're coming in like 20, 50, 100, 200 people, basically by waves. So this is definitely market driven. It's the first point I'm trying to make. And then the other aspect of the talent scheme is that, we have been making it so easy that we have taken away the requirement that person who applies for the talent visa have to have a job in Hong Kong. Those who meet the basic requirements can just come in. They come in and then they can take their time to find the right opportunity, in which there are plenty. 

David Hui: Bringing the talent in is one issue. What about the homegrown talent here? How do we speed up that pool of available talent as well?

King Leung: Now, talents have to understand the work culture of Hong Kong and mainland China, which arguably is a little bit different. Therefore FSB, they have put into the policy end of last year saying that they're going to fund some firms in, for example, in Shenzhen to hire some of the interns from the universities in Hong Kong for a number of months to basically give them the flavor of working in China. And luckily for tech firms, fintech firms, as they hire these talents from Hong Kong and these young folks got exposed to the different way of doing business, and then by the time they finish the internship, they come back to Hong Kong. Then they can bring like a whole new perspective and a set of skill sets. This is one example. 

Another example is now of course, Cyberport has run different programs, like training programs together with, for example, Hong Kong Institute of Bankers, like FinTech competency scheme, is some kind of certification program, to make sure that we're able to train the talents with the latest knowledge. And third, InvestHK, we have also partnered with Ant Group in which they have started this program with World Banks IFC many years ago, under the name of “ten times one thousand”. The vision is to train 1,000 fintech leaders in the next ten years. 

William Bown: I think as we bring this conversation to a close, I wanted to ask you one final question. Looking ahead, what specific skill sets and capabilities will be most important for leaders in this space to help their organizations meet their strategic goals?

King Leung: I think the short answer is I will also put this in a stakeholder management, because obviously Hong Kong has lots of very talented people in finance field. Again, digital asset space is global. So a number of players running global businesses who have seen the world. So I think functionally, these guys are fine, they know what they're doing and they do it very well. As we move forward, it's not just about companies closing the door and just do their own thing independently. It's about really integrating into the broader community ecosystem. So naturally, for the business leaders, sometimes they probably have to put aside some personal time to be more active in running associations. For example, there's a new association called Web3 Harbor. They were founded by a number of very well-known web3 leaders in Hong Kong. In doing so as they are more actively engaging with the industry players, then they become a very credible voice and then they can also represent the private sector to talk to the governments, to give us feedback. So that kind of ongoing, I would say, stakeholder management and communication is vital for us to basically build up Hong Kong to be a leading web3 and digital asset hub in the world.

William Bown: King, thank you. Really appreciate your time today. That was really helpful and really insightful.

King Leung: Thanks for having me, William and David.

Thanks for listening to The Heidrick & Struggles Leadership Podcast. To make sure you don't miss more future-shaping ideas and conversations, please subscribe to our channel on the podcast app. And if you're listening via Linked In, Twitter, or YouTube, why not share this with your connections? Until next time.

About the interviewers

William Bown (wbown@heidrick.com) is a partner in Heidrick & Struggles’ Hong Kong office and a member of the Financial Services Practice.

David Hui (dhui@heidrick.com) is the partner in charge of Heidrick & Struggles’ Hong Kong office and the regional managing partner of the Industrial Practice for Asia Pacific and the Middle East. He also leads the CEO & Board of Directors Practice in Hong Kong.