The Financial Secretary of Hong Kong, Paul Chan, has highlighted the importance of sustaining the growth of the Web3 industry in Hong Kong. Despite the unpredictability of the crypto market, Chan believes that it is an appropriate time to continue moving forward with the development of Web3.
In his blog post dated April 9th, Chan emphasized that Hong Kong has already taken significant steps to develop the Web3 industry, and it is now time to keep the momentum going. The financial secretary acknowledges that the crypto market has experienced fluctuations in the past, but he believes that this should not deter the city's efforts to further advance and apply Web3 technology.
Chan's budget proposal, unveiled on February 24th, highlighted the significance of the Web3 industry as one of the three main directions for Hong Kong's growth. The proposal sought to foster an ecosystem that would enable the continued growth of the industry, as it is deemed a critical aspect of the city's long-term economic development.
Hong Kong has positioned itself as a significant player in the Web3 space, as evident in the city's efforts to establish regulatory frameworks that support the growth of the industry. The Securities and Futures Commission (SFC) of Hong Kong, for instance, has developed a regulatory framework to oversee virtual assets trading platforms, including crypto exchanges.
Chan wrote in his blog:
"Web3 to steadily take the road of innovative development" Hong Kong will "adopt a strategy that emphasizes both 'proper regulation' and 'promoting development.'"
According to Chan, Hong Kong has additional plans to prioritize financial security by implementing measures aimed at preventing systemic risks. Additionally, the region aims to place emphasis on protecting investors through education and protective measures, such as anti-money laundering efforts. These initiatives indicate that Hong Kong recognizes the importance of maintaining a secure and trustworthy financial ecosystem, which is essential for the growth and adoption of Web3. By implementing these measures, Hong Kong aims to foster an environment that promotes the development of Web3 while ensuring the safety and security of its users and investors.
The idea of implementing a bill to regulate cryptocurrency was put forward by Hong Kong's government in October of last year. Later, on Feb. 20 of this year, Hong Kong's local securities regulator, the Securities and Futures Commission (SFC), issued a proposal for a regime governing cryptocurrency exchanges that will come into effect in June.
However, the industry has faced significant challenges due to a severe bear market and the collapse of several exchanges. Regulators are also closely monitoring the industry.
Nevertheless, according to Chan, the cryptocurrency industry is undergoing the same cycle as the early days of the internet in the 2000s, where the market stabilized after the "bursting of the bubble".
Chan wrote:
"After the tide of speculation ebbs, the remaining powerful players will focus more on competing in technological innovation, practical application and value creation, and contribute to improving the quality of the real economy."
He further added:
"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."
Hong Kong's approach to regulating cryptocurrency differs significantly from the United States, which has taken a more strict stance that has led to speculation that the center of the crypto industry may shift to Hong Kong.
As a result of the Hong Kong government's planned HKD 50 million ($6.4 million) funding injection into the city's Web3 sector in the 2023-24 budget, cryptocurrency exchange Gate.io has already announced intentions to establish a presence in the region.
During a speech in Hong Kong on March 20, Christian Hui, the Secretary for Financial Services and the Treasury, stated that Hong Kong has been receiving interest from crypto firms worldwide since October 2022.
In his latest post, Chan mentioned:
"The road of innovation and technological change has never been smooth sailing. 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."
