‘Right time’ for Hong Kong’s Web3 Push Despite Market Flux — Financial Secretary

Despite cryptocurrency market fluctuations, the Financial Secretary of Hong Kong, Paul Chan, believes that now is the “right time” for Hong Kong to move forward with Web3.

Chan explained in an April 9 blog post that one of the three major directions he has proposed in the city budget is for the further development and application of Web3.

According to Chan, Hong Kong will “adopt a strategy that emphasizes both ‘proper regulation’ and ‘promoting development’ in order for “Web3 to steadily take the road of innovative development.”

According to Chan, the region will also prioritize financial security, preventing systemic risks, and focusing on investor education, protection, and anti-money laundering measures. The Hong Kong government floated the idea of introducing a bill to regulate cryptocurrency in October of last year.

By the 20th of February this year, Hong Kong’s Securities and Futures Commission (SFC), the local securities regulator, had released a proposal for a cryptocurrency exchange regime that would go into effect in June. The industry has been hit hard by a brutal bear market, exchange collapses, and ongoing regulatory scrutiny.

According to Chan, the industry is simply going through the same process as the Internet in the early 2000s, and market participants became much calmer after the “bursting of the bubble.”

“As the tide of speculation recedes, the remaining powerful players will focus more on competing in technological innovation, practical application, and value creation, and contribute to improving the real economy’s quality,” Chan wrote.

“In the next stage, market participants must deepen their development of blockchain technology so that its characteristics and benefits of transparency, efficiency, security, disintermediation, de-platformization, and low cost can find broader application scenarios and solve more existing problems.”

Hong Kong’s approach to crypto regulation contrasts sharply with that of the United States, which has taken a tougher stance, leading to speculation that the crypto industry’s “center of gravity” will shift to Hong Kong. Following the local government’s planned 50 million Hong Kong dollar ($6.4 million) cash injection into Web3 in the city’s 2023-24 budget, cryptocurrency exchange Gate.io has already announced plans to establish a presence in Hong Kong.

Christian Hui, the Secretary for Financial Services and the Treasury, stated in a March 20 speech in Hong Kong that Hong Kong has been attracting “interest” from various crypto firms worldwide since October 2022. “The road to innovation and technological change has never been easy,” Chan wrote in his most recent post.

“Even if the development direction is set in stone, the actual path must be worked out step by step; only by perseverance in trying can we find new solutions and new ways out,” he added.