The Hong Kong government is positive and open to the Web3 industry and embraces the global digital economy

Web3.0, also known as the third-generation Internet, is a decentralized, open, shared and collaborative network platform based on blockchain, distributed storage, artificial intelligence and other technologies, which will bring new business to human society models, new social organizations and new values. Web3.0 is also an opportunity to create new types of assets and wealth. It will digitize, tokenize, and liquidize traditional assets such as currencies, securities, and real estate. Qualitative Token (NFT), Metaverse, etc. In this wave of Web 3.0, the Hong Kong government has shown an affirmative and open attitude. Since October 31, 2022, the Hong Kong government has promulgated a series of policies and measures related to Web 3.0, from the perspective of regulatory framework, market Openness, ecological construction, technological innovation and other aspects are all-round layout to promote the development and prosperity of Web3.0 in Hong Kong.

First, the Hong Kong government has formulated a clear and moderate regulatory framework to safeguard market order and investor interests. On December 8, 2022, the "Anti-Money Laundering and Terrorist Financing (Amendment) Bill 2022" was officially passed by the Legislative Council, bringing virtual asset service providers (VASP) into the scope of supervision and requiring VASP to apply for a license from the HKMA. On January 31, 2023, the Hong Kong Monetary Authority released the consultation conclusions of the discussion paper on encrypted assets and stablecoins. Respondents generally supported the regulation of stablecoins in a risk-based and flexible manner. On February 16, 2023, the Hong Kong Monetary Authority announced that the Hong Kong government had successfully issued a tokenized green bond of HK$800 million, which was the first batch of tokenized green bonds issued by the government in the world. On May 23, 2023, the China Securities Regulatory Commission issued the "Consultation Summary on the Proposed Regulatory Requirements Applicable to Operators of Virtual Asset Trading Platforms Licensed by the Securities and Futures Commission", and the "Virtual Asset Trading" will be implemented on June 1. From June 1, the China Securities Regulatory Commission will begin to accept applications from retail investors to trade virtual assets on licensed platforms.

Secondly, the Hong Kong government has promoted the opening of the market and the improvement of competitiveness to attract more investors and enterprises to participate in Web3.0. On December 16, 2022, the Hong Kong Stock Exchange launched the first batch of Bitcoin and Ethereum futures ETFs in Asia, which means Hong Kong stocks have become the first capital market in Asia that can directly provide investors with Bitcoin and Ethereum futures ETFs. On April 11, 2023, the Hong Kong Web 3.0 Association was officially established. As a cross-industry non-profit organization, the association will promote the construction of the Web 3.0 ecological environment in Hong Kong through professional research, standard formulation, and professional training. On June 12, 2023, BOCI successfully issued digital structured notes for the first time, becoming the first Chinese financial institution to issue blockchain digital securities in Hong Kong. On August 3, 2023, HashKey Exchange and OSL announced that they have been approved by the China Securities Regulatory Commission to upgrade their No. 1 and No. 7 licenses. After the upgrade, they can officially allow retail investors to trade.

Thirdly, the Hong Kong government has strengthened ecological construction and technological innovation to cultivate more talents and projects to participate in Web3.0. In January 2023, Hong Kong Cyberport will establish a Web3 base, and the budget announced that it will allocate 50 million Hong Kong dollars to accelerate the promotion of Web3 ecology Circle development, including holding international large-scale seminars, allowing the industry and enterprises to better understand cutting-edge developments, and promoting cross-sector business cooperation, etc. On April 12, 2023, the "2023 Hong Kong Web3 Carnival" opened. The carnival lasted for four days and attracted more than 10,000 live audiences, more than 300 speakers with global influence, and more than 100 popular Web3 projects, The community and media will participate in the exhibition on site. On May 18, 2023, the Hong Kong Monetary Authority announced the launch of the "Cyber Hong Kong Dollar" pilot project. 16 companies from the financial, payment and technology sectors will conduct the first round of pilot research within this year. The potential use cases of the Digital Hong Kong Dollar include comprehensive payment and programmable payment , offline payment, tokenized deposit, third-generation Internet (Web3) transaction settlement and tokenized asset settlement. On July 1, 2023, the Hong Kong government announced the establishment of a third-generation Internet (Web3.0) development task force to lead and drive related innovation exploration and development.

The Hong Kong government has shown forward-looking and leadership in the field of Web3.0, creating an environment and mechanism for Hong Kong that is conducive to the creation of new assets and wealth. Hong Kong is becoming the grasp of new assets in the world and the most open soil for incubating new industries. The Hong Kong government's attitude towards the Web3 industry is affirmative and open. It believes that Web3 is an irreversible future trend, and it is full of expectations for the development of Web3 in Hong Kong. The Hong Kong government hopes to use new digital assets to include the global new value and new assets of the AI+ digital economy through Web3 technology, and is determined to become a world-class leader in the Web3 wave.

The Hong Kong government recognizes that Web3 technology will have a profound impact on the global digital economy and will make the digital economy more inclusive, efficient, secure and innovative. The Hong Kong government supports the application of Web3 technology in finance, payment, trade, logistics, education, entertainment and other fields to enhance Hong Kong's competitiveness and attractiveness. The Hong Kong government also encourages the combination of Web3 technology and AI technology to achieve a higher level of intelligence and automation. The Hong Kong government hopes to use Web3 technology to create new types of digital assets, such as cryptocurrencies, stable coins, tokenized bonds, tokenized stocks, tokenized real estate, etc., to meet the needs of different investors and enterprises, and to promote the exchange of assets. Liquidity and value discovery.

The Hong Kong government has shown an open and inclusive attitude, maintaining close communication and cooperation with the global Web3 community to share experiences and promote best practices. The Hong Kong government has participated in a number of international organizations and initiatives, such as the Global Stablecoin Governance Forum (GSGF), the Global Financial Innovation Network (GFIN), the International Organization of Securities Commissions (IOSCO), etc., to discuss and discuss Web3-related regulatory standards and frameworks. coordination. The Hong Kong government is also actively communicating and cooperating with the mainland and other regions, such as signing a financial technology cooperation agreement with Shenzhen and establishing a financial innovation network with Singapore to promote Web3 development and interconnection in the region.

The Hong Kong government makes all-round layout for Web3 development

The Hong Kong government has made an all-round layout in the field of Web3, providing investment and support in various aspects such as infrastructure, talent training, project incubation, and ecological construction, in order to create an environment and mechanism conducive to Web3 innovation and development.

In terms of infrastructure, the Hong Kong government is studying the establishment of a regulatory framework for a digital Hong Kong dollar or stable currency, as well as promoting the application of distributed ledger technology (DLT) in the industry to tokenize bank deposits. These measures will help improve the level and efficiency of Hong Kong's financial digitization, and provide a basis and demonstration for tokenization in other fields. According to a report by Radio Television Hong Kong, Ruan Guoheng, vice president of the Hong Kong Monetary Authority, said that there is no timetable for promoting deposit tokenization, and it will not be mandatory for all banks to follow suit. The relevant process will not be linked to the study of digital Hong Kong dollars, and the two will be carried out in parallel. Chen Jinghong, Assistant President of Bank Supervision, said that he expects DLT technology to be more widely used in the future, such as reducing the transaction time of bond issuance to T+1. He also admitted that the DLT platform still faces limitations such as whether the technology is mature enough and whether it is stable enough. Further research is needed in the future, but when the technology is mature, there is an opportunity to expand to the tokenization of securities, buildings, and mortgage products in the future. It is expected that the infrastructure development of Hong Kong's digital finance will quickly become a global leader.

In terms of talent cultivation, the Hong Kong government encourages and attracts more young people and professionals to participate in the Web3 field through education, training, rewards and other means. The Hong Kong government has cooperated with a number of universities to offer courses and degrees related to Web3, such as the Hong Kong University of Science and Technology’s Master of Blockchain and Distributed Ledger Technology, and the Hong Kong University’s Financial Technology and Blockchain Professional Certificate. The Hong Kong government has also provided professional training and certification for Web3 practitioners, such as blockchain developers, blockchain analysts, and blockchain consultants, through organizations such as the Cyberport and the Web 3.0 Association. The Hong Kong government also recognizes and encourages outstanding talents and teams in the Web3 field through various incentive programs and events, such as the Fintech Awards and the Blockchain Olympiad.

In terms of project incubation, the Hong Kong government provides a favorable entrepreneurial environment and resources for Web3 projects through financial support, tax incentives, and regulatory sandboxes. The Hong Kong government has set up a number of special funds, such as Innovation and Technology Fund, Cyberport Venture Capital Fund, Cyberport Incubation Plan, etc., to provide financial support and investment opportunities for Web3 projects. The Hong Kong government also provides tax incentives for the Web3 project, such as levying 8.25% profits tax on the first 2 million profits within two years, and 16.5% profits tax on profits exceeding 2 million. The Hong Kong government also provides regulatory sandboxes for Web3 projects, such as the Financial Technology Regulatory Sandbox of the Hong Kong Monetary Authority and the Financial Technology Regulatory Sandbox of the Securities Regulatory Commission, providing a safe and flexible testing ground for Web3 projects.

In terms of ecological construction, the Hong Kong government has created an active and diverse ecological circle for the Web3 field by organizing activities, establishing platforms, and promoting cooperation. The Hong Kong government has organized a number of international and regional events, such as the 2023 Hong Kong Web3 Carnival and the 2022 Hong Kong International Fintech Forum, providing a stage for participants in the Web3 field to communicate and showcase. The Hong Kong government has established a number of professional and comprehensive platforms, such as the Cyberport Web3 Base and the Cryptocurrency Center of the Financial Development Council, etc., providing an incubation and development space for participants in the Web3 field. The Hong Kong government has promoted multiple cross-sector and cross-regional cooperation, such as the financial technology cooperation agreement signed with Shenzhen, the financial innovation network established with Singapore, and the blockchain partnership program with the European Union, etc., for the participation in the Web3 field It provides a broad and diverse space for cooperation. These cooperations will help share experience and resources, expand markets and users, and solve technical and regulatory challenges, so as to achieve win-win and common prosperity in the Web3 field.

Hong Kong is struggling to become a global anchor for new assets

The current policies and measures introduced by the Hong Kong government will help Hong Kong become a global Web3 financial center and seize the opportunities of new assets and wealth. The Hong Kong government also needs to do a good job in the following aspects:

• The catcher of new global assets: Web3 digital assets refer to the digital rights and interests generated, stored and traded on the blockchain network, which can represent various forms of value, such as currency, tokens, NFT, smart contracts, etc. The value types of Web3 digital assets can be divided from multiple dimensions, for example: According to the functions and attributes of digital assets, they can be divided into local assets (such as Bitcoin), practical assets (such as Ethereum), stable assets (such as USDT ), governance assets (such as UNI), collection assets (such as CryptoPunks), etc. According to the way digital assets are created, they can be divided into native assets (such as BTC), derivative assets (such as WBTC), generative assets (such as NFT generated by AI), etc. According to the usage scenarios of digital assets, they can be divided into financial assets (such as DeFi tokens), game assets (such as Axie Infinity’s AXS), social assets (such as BitClout’s Creator Coins), content assets (such as Audius’ AUDIO), etc. The Hong Kong government should establish a comprehensive and timely digital asset monitoring and analysis system to capture the dynamics and trends of new global assets, and adjust policies and strategies in a timely manner to adapt to market changes.

• An incubator for new global industries: AI+Web3 refers to the combination of artificial intelligence technology and blockchain technology to achieve more efficient, smarter, and safer data processing and value creation. AI+Web3 can generate new types of digital assets, and can also give birth to new industries and fields, such as: AI-generated NFT: use AI models to generate unique digital artworks based on text or images, and cast them into NFTs, with collections and investment value. For example, Botto1 is a generative art community governed by DAO, users can vote on Botto1's next creative theme and share the NFT revenue of their creation. AI-optimized DeFi: DeFi protocols are optimized and improved using AI models to improve their performance, security, and scalability. For example, BarnBridge is a risk-based DeFi protocol that uses AI models to assess the risks of different assets and divide them into different risk levels, thereby providing users with different returns and risk combinations. AI-driven DAO: Use AI models to assist and optimize the governance and decision-making of DAOs to improve their efficiency and fairness. For example, DeepDAO is an AI-based DAO analysis and management platform that helps users discover, join and participate in various DAOs, as well as monitor and evaluate DAO activities and performance. The Hong Kong government should establish an environment and mechanism conducive to the incubation and development of new industries, such as providing more technical support, financial subsidies, market access, etc., to stimulate innovation vitality and potential. The Hong Kong government should also strengthen communication and cooperation with the global Web3 community to share experience and resources, expand markets and users, and solve technical and regulatory challenges, so as to achieve win-win and common prosperity in the Web3 field.

• Connector of new global value: Hong Kong needs to create a multi-dimensional value connector of market, industry, institution and individual, build a safe and barrier-free encrypted value network, and lay a highway for the circulation of new digital assets. Hong Kong, as an international Financial centers and innovation centers have unique advantages and opportunities. They can create a multi-dimensional value connector for markets, industries, institutions, and individuals, and build a secure and barrier-free encrypted value network. Hong Kong has a sound legal system, an open market environment, rich financial resources, an active entrepreneurial atmosphere, and a diverse cultural background, which can attract and cultivate various Web3 projects and participants, forming a strong and diverse Web3 ecosystem .

In short, the Hong Kong government has a positive and open attitude towards Web3.0 and is determined to become a world-class leader in this field. The Hong Kong government has made comprehensive arrangements in terms of regulatory framework, market opening, ecological construction, and technological innovation to create an environment and mechanism that is conducive to the creation of new assets and wealth. Hong Kong is becoming the grasp of new assets in the world and the most open soil for incubating new industries. Hong Kong is the future city of Web3.0, which deserves our expectation and attention.

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