Hong Kong Embraces Web3 Despite Crypto Market Volatility
In a recent blog post, Paul Chan, the financial secretary of Hong Kong, emphasized the need for the city to move forward with Web3 technology, despite the ongoing volatility in the crypto market. Chan proposed a strategy that focuses on proper regulation and promoting development to facilitate the steady growth of Web3. He noted that Hong Kong plans to prioritize financial security, prevent systemic risk and focus on investor education and protection, as well as anti-money laundering measures.
The Hong Kong government first floated the idea of introducing a bill to regulate crypto last October. In February 2023, the Securities and Futures Commission (SFC), the local securities regulator, issued a proposal for a cryptocurrency exchange regime to come into force in June. The industry has faced a bear market and setbacks with stock market collapses and ongoing scrutiny from regulators. However, Chan compared the current situation to the internet bubble of the early 2000s, where market participants became much calmer after the bubble burst.
Chan also emphasized the need for market participants to focus on competing in technological innovation, practical application and value creation, and contribute to improving the quality of the real economy. He called for a deeper development of blockchain technology, which can find wider application scenarios and solve more existing problems due to its characteristics and advantages of transparency, efficiency, security, disintermediation, de-platformization and low cost.
Hong Kong’s approach to crypto regulation stands in stark contrast to that of the US, which has adopted a more hard-line response to the industry. The difference in regulatory approaches has led to speculation that the crypto industry’s “center of gravity” will move to Hong Kong. Cryptocurrency exchange Gate.io has already announced plans to launch a presence in Hong Kong following the local government’s planned 50 million Hong Kong dollar ($6.4 million) cash injection for Web3 in the city’s 2023-24 budget.
Speaking in Hong Kong on March 20, Financial Services and Finance Secretary Christian Hui stated that Hong Kong has attracted “interest” from various crypto firms around the world since October 2022. Chan concluded his post by acknowledging that the path to innovation and technological change has never been smooth sailing. He emphasized that even if the direction of development is locked, the road itself must be worked out step by step. He asked for perseverance in trying to find new solutions and new ways to facilitate the steady growth of Web3 in Hong Kong.
