Hong Kong’s financial secretary says now is the “right time” for Hong Kong to push forward with Web3 despite volatility in the cryptocurrency market. In an April 9 blog post, Paul Chan explained that one of the three main directions he proposed in the city's budget is the further development and adoption of Web3.
Translated, Chan wrote that Hong Kong would "adopt a strategy that emphasizes both 'moderate regulation' and 'promoting development'" in order to "steadily follow the path of innovation and development for Web3". The region also plans to focus on financial security, preventing systemic risks, and focusing on investor education, protection and anti-money laundering measures, Chen said.
Last October, the Hong Kong government floated the idea of introducing a bill to regulate cryptocurrencies. As of February 20 this year, local securities regulator Hong Kong’s Securities and Futures Commission (SFC) released a proposal for a cryptocurrency trading regime that will come into effect in June.
The industry has been going through a brutal bear market and has suffered setbacks from the collapse of exchanges and continued scrutiny from regulators. Chan believes the industry is going through the same process as the internet did in the early 2000s, with market participants much calmer after the “bubble burst.”
"After the tide of speculation recedes, the remaining power players will focus more on competing in technological innovation, practical application and value creation, contributing to improving the quality of the real economy," Chen wrote. "In the next stage, market participants need to carry out more in-depth development of blockchain technology, so that its characteristics and advantages such as transparency, efficiency, security, disintermediation, de-platformization, and low cost can find broader application scenarios. Solve more existing problems."
Hong Kong’s approach to cryptocurrency regulation stands in stark contrast to the U.S., which has taken a tougher response, leading to speculation that the industry’s “center of gravity” will shift to Hong Kong. Cryptocurrency exchange Gate.io has announced plans to launch operations in Hong Kong following the local government’s planned HK$50 million ($6.4 million) cash injection into Web3 in the city’s 2023-24 budget.
In a speech in Hong Kong on March 20, Secretary for Financial Services and the Treasury Andrew Hui said that Hong Kong has been attracting “interest” from various cryptocurrency companies around the world since last October. "The road to innovation and technological change is never smooth," Chen said in his latest post. "Even if the development direction is locked, the actual path has to be explored step by step; only by persisting in trying can we find new solutions and new ways out."
