About half of Hong Kong's financial institutions are using virtual assets in their business operations, according to a report released on Tuesday.

The Hong Kong Institute for Monetary and Financial Research (HKIMR) -- an affiliate of the Monetary Authority -- surveyed 59 entities, including those from the banking, insurance and asset management sectors between May and July last year.

The survey revealed that 53 percent of firms were using virtual assets, while 85 percent expected virtual assets to be part of their core business operations in the next three years.

Speaking at a press briefing, the institute's head, Giorgio Valente, said financial institutions are cautious about the application of virtual assets.

"At the moment, because people are trying to understand how to maximise the benefits, while learning about its vulnerabilities, these elements obviously would actually impact the effective adoption. But going forward, we expect the situation eventually may improve," he explained.

Valente added that Hong Kong remained attractive as a virtual assets hub, as the SAR had a well-defined regulatory framework and robust financial infrastructure.