Hong Kong’s Financial Secretary, Paul Chan, has affirmed that now is the “right time” for the city to push forward with Web3. Despite recent market fluctuations in the crypto industry. In a blog post on April 9, Chan explained that one of the three major directions he proposed in the city’s budget was the further development and application of Web3.
A Strategy for Web3 Development
Chan emphasized that Hong Kong would “adopt a strategy that emphasizes both ‘proper regulation’ and ‘promoting development,'” to ensure that Web3 steadily takes the road of innovative development.
Additionally, the city plans to focus on financial security, preventing systemic risks, and investor education and protection. Measures around anti-money laundering will also be introduced to ensure the growth of a safe and sustainable Web3 industry in Hong Kong.
Crypto Regulation in Hong Kong
In October last year, the Hong Kong government floated the idea of introducing a bill to regulate cryptocurrencies. By February 20 of this year, the Securities and Futures Commission (SFC), the local securities regulator, released a proposal for a regime for cryptocurrency exchanges set to take effect in June.
However, the crypto industry has been experiencing a savage bear market, exchange collapses, and ongoing scrutiny from regulators. Chan noted that the industry is merely going through the same process as the early 2000s internet bubble. After the “bursting of the bubble,” market participants became much calmer.
Contributing to Improving the Real Economy
Chan wrote, “In the next stage, market participants need to develop blockchain technology more deeply so that its characteristics and advantages of transparency, efficiency, security, disintermediation, and low cost can find wider application scenarios and solve more existing problems.”
He expressed hope that the remaining powerful players will focus on competing in technological innovation. Practical application, and value creation, and contribute to improving the quality of the real economy.
Hong Kong’s Approach to Crypto Regulation
Hong Kong’s approach to crypto regulation is in stark contrast to that of the United States.
Which has adopted a more hardline response that’s led to speculation that the crypto industry’s “center of gravity” will shift to Hong Kong.
Cryptocurrency exchange Gate.io has already announced plans to launch a presence in Hong Kong following the local government’s planned HKD 50 million ($6.4 million) cash injection into Web3 in the city’s 2023-24 budget.
Hong Kong’s Attractiveness to Crypto Firms
In a March 20 speech in Hong Kong, the Secretary for Financial Services and the Treasury, Christian Hui, stated that Hong Kong has been attracting “interest” from various crypto firms worldwide since October 2022.
“The road of innovation and technological change has never been smooth sailing,” Chan said in his latest post. “Even if the development direction is locked, the actual path has to be worked out step by step. Only by persisting in trying can we find new solutions and new ways out,” he added.
Despite the recent market fluctuations, Hong Kong’s Financial Secretary is optimistic about the Web3 industry’s development. The government’s proposed strategy emphasizes both proper regulation and promoting development, financial security, and investor protection. The industry’s current struggles are seen as a natural part of its growth and development. With crypto firms showing interest in Hong Kong, it seems that the city is poised to become a hub for Web3 innovation and technological change in the future.