Hong Kong Embracing Web3 Development
The financial secretary of Hong Kong, Paul Chan, has expressed that now is the opportune time for the city to push forward with the development of the Web3 industry, despite the fluctuations in the crypto market. In a recent blog post on April 9, Chan outlined one of the three major directions proposed in the city’s budget, which focuses on the further development and application of Web3.
Adopting a Strategy for Innovation
Chan emphasized that for Web3 to progress steadily, Hong Kong will adopt a strategy that emphasizes both “proper regulation” and “promoting development.” The region also plans to prioritize financial security, prevent systemic risks, and focus on investor education, protection, as well as measures to combat anti-money laundering.
Regulatory Efforts in Hong Kong
Hong Kong’s efforts to regulate the crypto industry began in October last year when the government floated the idea of introducing a bill for crypto regulation. By February 20 of this year, the Securities and Futures Commission (SFC), Hong Kong’s local securities regulator, released a proposal for a regime for cryptocurrency exchanges, set to take effect in June.
Weathering Market Fluctuations
Despite the challenges faced by the crypto industry, Chan compared it to the early days of the Internet in the early 2000s, stating that after the “bursting of the bubble,” market participants became more composed. He believes that after the speculative phase, the industry will focus on competing in technological innovation, practical application, and value creation to contribute to improving the quality of the real economy. “In the next stage, market participants need to develop blockchain technology more deeply, so that its characteristics and advantages of transparency, efficiency, security, disintermediation, de-platformization, and low cost can find wider application scenarios and solve more existing problems,” Chan wrote.
Contrasting Approach with the United States
Hong Kong’s approach to crypto regulation stands in contrast to that of the United States, which has adopted a more stringent stance. This has led to speculation that Hong Kong may become the new “center of gravity” for the crypto industry.
Positive Outlook for Web3 Development
The planned 50 million Hong Kong dollar ($6.4 million) cash injection into Web3 in Hong Kong’s 2023-24 budget has already attracted interest from crypto firms worldwide. Cryptocurrency exchange Gate.io has announced plans to establish a presence in Hong Kong. In a recent speech on March 20, the secretary for financial services and the treasury, Christian Hui, highlighted Hong Kong’s appeal to crypto firms since October 2022. “Innovation and technological change have never been smooth sailing,” Chan stated in his latest blog 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.” With Hong Kong’s proactive approach to Web3 development and the focus on proper regulation and promotion of innovation, the city is poised to become a key player in the global crypto industry.
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