Article written by: Lesean, MetaEra
On October 31, 2022, an online AMA titled "The Tide Rises in Hong Kong, Interpretation of Hong Kong's Major New Crypto Policy" was launched on Twitter Space. This one-hour live broadcast gathered many Chinese blockchain heavyweights, and hundreds of thousands of people poured into the live broadcast room, as if it was a carnival, and also like cheering for the departure of a big ship.
At that time, the Hong Kong Special Administrative Region Government had just released (a policy statement on the development of virtual assets in Hong Kong), in which the government clarified its policy stance and guidelines: it would cooperate in legal and regulatory systems to provide a convenient environment.
Two years have passed in the blink of an eye. Web 3.0 has grown rapidly in Hong Kong from a spark to an unstoppable prairie fire. That live broadcast with hundreds of thousands of people was the starting point of MetaEra's dream and our original intention to stick to Hong Kong. From the beginning, MetaEra has clearly positioned itself as a "global leading media based in Hong Kong" with influence radiating across Asia and even the world.
In early December 2024, Kong Jianping, director of Hong Kong Cyberport Management Company Limited and chairman of Nano Labs, shared at the forum: "First there was Hong Kong's positive attitude and then the Trump administration's development of digital currency, which led to the rapid breakthrough of Bitcoin price at $100,000. I am optimistic about Hong Kong's development in the field of digital encryption and even the entire Web 3.0 field in the long term. Hong Kong may surpass New York and become the world's financial center."
This view is not groundless. Looking at the development of Web 3.0 in Hong Kong in 2024, while building a more stable and convenient market environment, it is also leveraging its advantages as a financial center.
Orderly and compliant, steady progress
Unlike other regions, Hong Kong's progress in promoting Web 3.0 is orderly and compliant. In order to avoid wild growth, while giving freedom, it focuses on legislative updates, industry supervision, issuing licenses and promoting stablecoins. In particular, as an established financial center, Hong Kong's strict regulations and transparent standards for financial licenses and virtual asset service provider (VASP) licenses provide a safer way for relevant customers. The Hong Kong government officially opened the application for virtual asset service provider (VASP) licenses on June 1, 2023, and required virtual asset service providers to submit license applications on or before February 29, 2024. As of December 18, 2024, there are seven members of the Hong Kong Licensed Virtual Asset Trading Platform (VATP), including OSL Exchange, HashKey Exchange, HKVAX, Cloud Account Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group and Thousand Whales Technology.
As a virtual asset designed to maintain a relatively stable value with certain assets (usually currencies), stablecoins can further mobilize the interconnection between Hong Kong's traditional financial and virtual asset markets. In January 2024, in order to further promote the legislative process of the stablecoin regulatory framework, the Hong Kong Monetary Authority issued a consultation document, proposed more detailed regulatory measures, and clarified the definition of fiat-referenced stablecoins (FRS) for the first time in the document; on March 12, 2024, the Hong Kong Monetary Authority officially launched a regulatory sandbox for Hong Kong dollar stablecoins, providing an effective channel for the exchange of views between the HKMA and the industry on the proposed regulatory system; in the same month, in order to support the development of Hong Kong's tokenization market, the HKMA launched a new wholesale central bank digital currency (wCBDC) sandbox project Ensemble. This sandbox puts Hong Kong ahead of most other parts of the world in stablecoin legislation.
In July 2024, the Hong Kong Monetary Authority and the Treasury Department issued a report on the results of the consultation on the legislative proposals for the implementation of the regulatory system for stablecoin issuers in Hong Kong. For the first time, the HKMA clearly stated that it could accept tokenized forms of high-quality and highly liquid assets as the issuer's reserve assets. On July 18, the HKMA released the list of participants in the "sandbox" for stablecoin issuers. The first batch of selected companies included: Standard Chartered Bank, Animoca, Yuanbi Innovation Technology, Hong Kong Telecom, JD Coin Chain Technology and other three institutions.
On December 6, the Hong Kong government published the (Stablecoin Bill) to introduce a regulatory system for fiat stablecoin issuers in Hong Kong, and it was first read on December 18. The bill aims to improve the regulatory framework for virtual asset activities to address the potential risks posed by fiat stablecoins to financial stability, ensure that users have adequate protection, and give full play to the benefits of virtual assets and related technologies, further consolidating Hong Kong's position as a global stablecoin development and regulatory center.
In terms of RWA, the HKMA issued a circular (Sales and Distribution of Tokenized Products) in February this year to strengthen the management of institutions launching tokenized products; the Hong Kong Securities and Futures Commission stated in May that real-world asset (RWA) investment may be open to retail investors to attract more funds and financial technology talents to Hong Kong. In August, Ant Digital Technology announced that it had successfully completed the first domestic RWA (Real World Assets tokenization) financing based on new energy physical assets in Hong Kong in cooperation with Longxin Group, with a financing amount of approximately RMB 100 million. This innovative transaction was selected as one of the first real-world asset tokenization cases in the Hong Kong Monetary Authority (HKMA) Ensemble project sandbox. At the Hong Kong Fintech Week on October 28, Ant Digital Technology once again publicly stated that it would increase its RWA business in Hong Kong and launch the "Two Chains and One Bridge" platform for the first time.
On August 28, 2024, the Hong Kong Monetary Authority officially launched the "Ensemble" sandbox project, which will use experimental tokenized currencies to promote interbank settlement and focus on tokenized asset transactions. This marks the Hong Kong government's forward-looking layout in the field of tokenized assets and also demonstrates Hong Kong's determination to become a global RWA tokenization center.
Support from multiple parties to build a foundation for the ecosystem
As early as 2022, the Hong Kong government's declaration pointed out that Hong Kong, as an international financial center, will support the innovation and ecosystem of the international virtual asset business. The Hong Kong government will take the lead in issuing non-fungible tokens (NFTs), promoting green bond tokenization, digital Hong Kong dollars and other related pilot programs. At the same time, the Hong Kong Stock Exchange will launch Asia's first batch of virtual asset ETF products and allocate HK$50 million to support Hong Kong's Web 3.0 ecosystem. From June 1, Hong Kong officially became the first region in the world to regulate and license virtual asset trading platforms. On April 11, 2023, Hong Kong Chief Executive John Lee attended the inauguration ceremony of the Hong Kong Web 3.0 Association and delivered a speech, clearly conveying Hong Kong's determination to develop Web 3.0 to the outside world, and hoped to provide services for the ecological development of Web 3.0 through industry associations and other organizations.
In 2024, Hong Kong will invest more and more in Web 3.0 in terms of policies, corporate support, and talent cultivation. On January 4, 2024, the "New Opportunities Summit for Digital Economic Development" was successfully held at the Hong Kong Financial Hall, and the Hong Kong Web 3.0 Standardization Association (W3SA-HK) was established. In order to establish industry consensus, promote technological innovation, standardize the industry ecology, support government decision-making, and expand Hong Kong's international influence and voice in the field of Web 3.0. On May 30, 2024, Cyberport announced the establishment of the "Web 3.0 Investment Circle" under the "Cyberport Investment Network", aiming to establish an exclusive investor network in the Web3.0 field to promote investment in Web 3.0 projects. In October, Cyberport and Silicon Valley venture capital Draper Dragon jointly established the Web 3.0 accelerator "Hong Kong Cyberport Draper Dragon Web 3.0 Accelerator" to actively promote the entrepreneurial ecology of Hong Kong Web 3.0. The Hong Kong Web3 and Virtual Asset Development Subcommittee proposed increasing investment in Hong Kong Cyberport and Hong Kong Science Park. As of December, Hong Kong already has nearly 300 Web 3.0-related companies.
On the occasion of the second anniversary of Hong Kong's new encryption policy, the Chief Executive of the Hong Kong Special Administrative Region, John Lee, announced the 2024 Policy Address, which focused on stepping up the development of "new quality productivity" and establishing a 10 billion yuan "Innovation and Technology Industry Guidance Fund"; optimizing the "Innovation and Technology Venture Capital Fund"; allocating 180 million yuan to launch the "Innovation and Technology Accelerator Pilot Program" to match market funds, attract professional start-up service agencies at home and abroad to settle in Hong Kong, and proposed more specific measures in consolidating its own advantageous position as a financial center and introducing international high-end talents.
Web3Labs, a leading incubator focusing on the Web 3.0 field, is committed to building a global entrepreneurial highland for the Web 3.0 industry in accordance with the Hong Kong government's declaration, allocating US$10 million to provide full ecological services and hold online and offline activities. On November 11, Web3Labs established a new offline Web 3.0 industry base, Web3Labs HK Center, in Causeway Bay, Hong Kong. With the help of Hong Kong's unique geographical location, financial advantages and open business environment, Web 3.0 technology will be applied to a wider range of fields, providing support and assistance to more entrepreneurs, and promoting the entire industry to move forward more steadily. Web3Labs also officially announced the joint "acceleration plan" with DFINITY Foundation, KuCoin Labs, TON and other institutions in 2024. Bring underlying technology and financial support to the development of the industry ecosystem.
On November 27, the Hong Kong Legislative Council Web3 and Virtual Asset Development Subcommittee publicly invited all sectors to submit opinions on Web 3.0 and virtual asset development issues, aiming to further promote the development of Hong Kong's Web 3.0 and virtual asset industries. The main focus is on virtual asset trading-related licenses and sandbox regulations and the development of the Web3 ecosystem.
International Web 3.0 event boosts Hong Kong industry ecosystem
The Web 3.0 trend has swept Hong Kong, and various large-scale international events have also landed in Hong Kong, providing a platform for industry professionals to communicate and cooperate, and also focusing the world's attention on Hong Kong. Every large-scale event has brought a huge amount of innovative thinking and cooperation opportunities.
On April 6, 2024, the "2024 Hong Kong Web3 Carnival" was held at the Hong Kong Convention and Exhibition Center. As a major event in the field of cryptocurrency, the three-day carnival attracted 30,000 participants, with more than 150 sub-events held. The event was star-studded, with Hong Kong Financial Secretary Paul Chan, Legislative Council member Dargen Chiu, Innovation, Technology and Industry Bureau, Hong Kong Trade Development Council, Cyberport, HKMA and other heavyweight guests all on the stage, and many well-known Web 3.0 practitioners attended the meeting to share. This event has also become an annual event for Web 3.0 in Hong Kong. During the conference, MetaEra, as an important partner, successively hosted the Hong Kong Crypto Finance Forum, the Hong Kong Web 3.0 Ecological Welcome Reception and other activities, linking well-known Hong Kong Web 3.0 institutions and guests, while also providing rich event content.
On May 9 and 10, 2024, Bitcoin Asia 2024 was grandly opened at Kai Tak Cruise Terminal in Hong Kong. The Bitcoin Summit has always been held in the United States, and it was held in Hong Kong for the first time in Asia, which shows Hong Kong's important position in Web 3.0 and its determination and courage to strive to make Hong Kong a global cryptocurrency center.
In November 2024, the week-long fintech event, Hong Kong FinTech Week, was held at AsiaWorld-Expo, attracting more than 100 economies and more than 30,000 participants. The forum themes focused on artificial intelligence, blockchain and digital assets, financial innovation, etc. It is worth noting that the proportion of participants and speakers increased from regulators and traditional financial institutions. The collision of tradition and innovation provides a new direction for the development of Web 3.0 in Hong Kong.
The innovation and impact of the development of Web 3.0 on Hong Kong’s financial industry
On February 8, 2024, the Hong Kong government launched a public consultation on the legislative proposal to establish a licensing system for virtual asset over-the-counter (OTC) service providers. This also means that virtual currency OTC will usher in a compliance era in Hong Kong. After all, the collapse of JPEX in 2023 is inseparable from the virtual currency OTC service provider Crypto Leopard. The Hong Kong government hopes to provide users with more protection and remedies through effective supervision and clear industry standards.
On April 30, 2024, six virtual asset spot ETFs were officially listed on the Hong Kong Stock Exchange, including Bitcoin and Ethereum spot ETFs under China Asset Management (Hong Kong), Bosera International, and Harvest International. These six ETFs show certain differentiation in product fees, transactions, issuance, virtual asset platforms, etc. The day of listing was regarded as a historic moment in the Hong Kong capital market, because the issuance of Ethereum spot ETFs was three months earlier than that of the United States.
Entering the second half of 2024, US President-elect Trump's high attention and support for cryptocurrencies ignited market enthusiasm, ushering in a strong wave of growth in the cryptocurrency market. It even broke through the 100,000 US dollar mark on December 5, setting a new historical record. Hong Kong virtual asset spot ETFs also set a historical high, especially the Bitcoin ETF launched by Southern Asset Management's Hong Kong subsidiary Southern China Asset Management, which has the largest trading volume. As of the close of November 12, the cumulative increase of Southern Bitcoin ETF this year has reached 87.88%.
At the same time, cryptocurrency concept stocks also rose. When Bitcoin broke through the $100,000 mark, Boyaa Interactive (00434.HK), Xiong'an Technology (08267.HK), and Meitu Inc. (01357.HK) rose by 22.49%, 14%, and 6.29%, respectively. Affected by global economic uncertainty and investor confidence, cryptocurrency concept stocks are more volatile, but the overall potential is huge, and I believe there will be stronger growth in the future.
Hong Kong plans to exempt hedge funds, private equity funds and some family offices from tax on investment gains in cryptocurrencies and other alternative assets to boost its appeal as a wealth management hub.
On November 25, Hong Kong digital bank ZA Bank launched a virtual asset trading function for retail users in its app, becoming the first bank in Asia to provide cryptocurrency trading services to retail users. At the same time, HashKey Exchange, Hong Kong's largest licensed virtual asset exchange, announced the launch of HashKey Pro, which supports API trading, bulk trading services, and enterprise-level account structure and permission management, providing user asset insurance and transaction matching engines for institutional investors. The cooperation between ZA Bank and HashKey Exchange represents a new trend of collaboration between the traditional banking system and the digital currency ecosystem, providing a stronger competitive advantage for the development of the Web 3.0 ecosystem in Hong Kong.
On December 12, HashKey Exchange announced that its asset size reached a historic HK$10 billion for the first time. As of 2024, HashKey Exchange's cumulative transaction volume has reached HK$580 billion.
The US helps fuel the fire of Web 3.0 in Hong Kong
At a new historical node, Trump announced the Bitcoin strategic reserve plan in a high-profile manner, adding momentum to the development of Bitcoin. Just as other parts of the world responded to the United States and planned to include Bitcoin in the national strategic reserve, Hong Kong also showed friendly intentions: at the Hong Kong Legislative Council meeting on December 11, Councillor Wu Jiezhuang suggested to Acting Secretary for Financial Services and the Treasury, Chan Ho-lim, that the Hong Kong government consider including digital assets and cryptocurrencies in the fiscal reserve and use the foreign exchange fund to continue to purchase and hold them for a long time. Chan Ho-lim responded mildly, and his attitude indicated that cryptocurrencies are expected to be included in the fiscal reserve.
Influential figures ride the waves to promote Hong Kong's ecological development
The rapid and healthy development of Web 3.0 in Hong Kong is inseparable from visionary and courageous guides and practitioners who are sensitive to market trends, grasp policy trends, stand at the forefront, and dare to be the first. In October 2024, MetaEra launched the [Hong Kong Zone] on the second anniversary of Hong Kong's new encryption policy, and launched a series of interviews with influential figures, and held high-end dialogues with many government members, experts and scholars, investors, entrepreneurs, etc. who have made outstanding contributions and have a significant impact on the development of Web 3.0 in Hong Kong. Deliver their development concepts, policy suggestions, construction directions and other information to the public who are concerned about the development of Web 3.0 in Hong Kong. Here, we have also compiled the summary and views of some representatives on the development of Web 3.0 in Hong Kong for readers.
“In terms of virtual asset regulation, Hong Kong implements a strict licensing system to protect investors and increase market transparency. The government encourages asset management companies to invest in virtual assets while strengthening risk management and compliance procedures to ensure the long-term healthy development of the market. In addition, the government comprehensively promotes innovative financial services, supports the development of virtual banks and online insurance, and uses big data and artificial intelligence to improve the diversity and quality of financial services, thereby attracting more international investment.”
——Hong Kong Legislative Council Member Wu Jiezhuang
“In this era of rapid technological development, Hong Kong’s Web 3.0 ecosystem is facing unprecedented opportunities and challenges. As a global financial center, Hong Kong is at the forefront of the Web 3.0 revolution. I hope we can seize this historical opportunity and create a more open and inclusive digital economy ecosystem through innovation and cooperation.”
——David Chiu, Member of the Legislative Council of Hong Kong
“In the next five years, Hong Kong’s achievements in the field of Web 3.0 will depend on the development trend of the entire industry. From a macro perspective, Hong Kong’s position in Web 3.0 is expected to surpass its position in Web 2.0 and even its position as a traditional financial center. With its comprehensive advantages in talent, capital, information, and industry chain capital, Hong Kong has demonstrated stronger competitiveness than Singapore, Dubai and other regions in key tracks such as finance, DePIN, and RWA in Web 3.0.”
—— Kong Jianping, member of the Hong Kong Web 3.0 team, Cyberport director, and founder of Nano Labs
“We welcome Hong Kong’s proactive approach to developing the Web 3.0 industry. As one of the world’s leading financial centers, Hong Kong has the technical infrastructure and professional talent needed to become a global Web 3.0 hub. Hong Kong’s commitment to advancing the Web 3.0 regulatory framework, such as the HKMA’s stablecoin project, demonstrates its balanced approach to innovation and compliance. We believe Hong Kong has great potential to play a key role in shaping Web 3.0 and the open metaverse, and driving the future of digital property rights.”
—— Xiao Yi, Co-founder and Executive Chairman of Animoca Brands
"The main theme of Hong Kong in the next decade will be integration. We will actively build a more open, innovative and robust financial market driven by the principles of 'no finance without regulation', 'long-termism' and 'license first'."
——Weng Xiaoqi, former CEO of HashKey Exchange
“Hong Kong has the courage to become a leader in the wave of innovation under the development trend of Web 3.0. In the future, Hong Kong will develop into a core hub of the global Web 3.0 economic wave.”
——Du Jun, Executive Director and CEO of SINOHOPE
“Hong Kong’s role as a gateway where the East meets the West will further expand the potential of stablecoins in the Asian market and meet the growing demand for cross-border trade and payments. Stablecoins can eliminate friction in global transactions by synchronizing information and capital flows. RD Technologies is creating a compliant and stable digital currency that provides speed and cost advantages for corporate cross-border transactions.”
——Yuanbi Technology CEO Liu Yu
“As a global financial and technological intersection, Hong Kong has all the conditions to lead Web 3.0 innovation. I look forward to working with different stakeholders in the context of Hong Kong’s Web 3.0 development to jointly promote the prosperity of the Web 3.0 ecosystem.”
——Web3Labs CEO Caspar Wong
There are policy directions, ecological guarantees, financial innovations, and leaders. Two years ago, Hong Kong ignited the spark of Web3.0, which is now burning more and more vigorously, and has gradually spread across the country. As it grows with Hong Kong, MetaEra will also reach a new historical starting point in 2024 with an amazing performance of tenfold business growth. We often say that whoever has the right to speak can become the rule maker. In the days to come, MetaEra, as a Web3.0 information platform, will surely help Hong Kong stand at the center of the Web3.0 stage. Under the spotlight, you and I are all trendsetters at this moment.