On November 25, 2024, Hong Kong’s Sing Tao Daily published an exclusive interview with Professor Gu Ronghui, co-founder of CertiK. Sing Tao Daily is Hong Kong’s first Chinese newspaper focusing on financial news. It enjoys a high reputation in the industry for its authority and credibility and has been selected by industry journalists as one of the most credible media in Hong Kong.
In the interview, Professor Gu Ronghui conducted an in-depth analysis of the policies and development strategies of Hong Kong and Singapore in the field of Web3.0. He pointed out that if Hong Kong wants to maintain its competitiveness in the field of Web3.0, it must follow the development of the industry more closely and adjust policies to attract and maintain the interest of Web3.0 start-ups. As a leading security agency in Web3.0, CertiK is committed to providing high-quality security audit services to help the Hong Kong government and industry participants promote compliance development and work together to build a healthy and sustainable Web3.0 ecosystem.
The following is the full report:
Hong Kong is conservative in implementing Web 3.0 and may be overtaken by Singapore. Consultants lament that there is a gap with the vision and urge to keep up with the industry ecology.
The Hong Kong government issued a virtual asset policy declaration in October 2022, determined to develop into a virtual asset center. Gu Ronghui, co-founder of CertiK, a Web 3.0 security audit company that serves as an official consultant in both Singapore and Hong Kong, said that the Hong Kong government is very forward-looking and proactive in its vision, but it is particularly conservative in its implementation. The current development of related industries in Hong Kong is two years ahead of schedule. There is a gap in the vision; in contrast, although Singapore has tightened its policies, it will be closer to the industry when it comes to implementation, and the development progress is expected to be very fast. We hope that the Hong Kong government can closely follow the development of the Web 3.0 ecosystem, otherwise it will be caught up.
Gu Ronghui is currently a member of the Hong Kong Government's Web 3.0 Development Task Force and a member of the International Technical Advisory Committee of the Monetary Authority of Singapore, witnessing the development of Web 3.0 policies in both places. In an interview, he pointed out, "The determination and vision of the Hong Kong government at the beginning of 2023 are far more positive and positive than that of the Singapore government." In the past two years of development, the Hong Kong government has launched multiple licensing frameworks. Although Singapore is advancing slowly, after the policy is released, it is actually what Web 3.0 really needs.
Public chain debt issuance is a step slower
For example, he said that governments in both places are trying to issue bonds on the blockchain. At that time, Singapore issued bonds on a public chain, and CertiK provided security audits throughout the process. When the Hong Kong government issued bonds, CertiK also wanted to provide support, but later found that it was not needed because the Hong Kong government bonds were issued on Goldman Sachs' private chain. "The Singaporean government has truly experienced the entire process and understands the various risks; the Hong Kong government is extremely conservative at the implementation level and may have a completely different understanding of things." He described that Singapore can expand the scale in the next step, while the Hong Kong government must Regarding the implementation of the chain, "Hong Kong has taken this step slowly, and there is a big difference in the understanding of the overall participants."
In terms of supervision of virtual property trading platforms, Hong Kong’s new framework came into effect on June 1. Currently, three platforms have been issued formal licenses, and Singapore only regulates them under the (Payment Services Act). However, the Hong Kong platform is strictly regulated, which requires more time for currency approval, and derivatives trading has not yet been opened to the market. Gu Ronghui admitted that Hong Kong's compliance exchanges have limited space to expand their business, and they even need to establish a global platform to earn more revenue.
The two places are also promoting the development of stablecoins. Hong Kong's stablecoin sandbox has three projects, namely JD.com (09618), Yuanbi and Standard Chartered and their partners. Singapore allows StraitsX and Paxos to issue stablecoins. He pointed out that Paxos has experience in helping Paypal issue stablecoins. Singapore has issued licenses to existing companies with first-hand experience, while the three projects in Hong Kong have no experience in this area. "It is also a stablecoin license. The Singapore government's understanding It may be faster than the Hong Kong government, and subsequent development will also be faster.”
Local virtual currency spot ETFs are better
Virtual currency spot ETFs in Hong Kong are better. The first batch of 6 virtual currency spot ETFs issued by 3 fund companies were listed on the Hong Kong Stock Exchange (00388) in early May. There has been no related development in Singapore. However, Gu Ronghui said that not many banks are willing to list it, and banks are not very active in recommending retail investors to buy it. He bluntly said that the Hong Kong government’s promotion efforts are very high, especially the compliance process, but it is very conservative and cautious when it comes to implementation. “When the policy was announced two years ago, everyone thought that Hong Kong was going to open up. Many Web 3.0 start-ups had very high hopes. "We are looking forward to coming to Hong Kong, but there will be a big gap in the process." Many companies have reduced their teams, and CertiK itself has also slowed down its business development in Hong Kong. He expressed his hope that the Hong Kong government will adjust its policies to maintain its attractiveness.
Attract large stakeholders first, then promote compliance
Earlier, many large-scale international virtual asset trading platforms withdrew their applications for licenses in Hong Kong. Gu Ronghui, co-founder of CertiK and a member of the Hong Kong government's Web 3.0 development task force, said that the Hong Kong government should first regulate large-scale virtual currency industry stakeholders with existing scenarios. , encouraging them to push in the direction of compliance will have a more meaningful impact on the industry. Regarding Circle, the world's second largest stablecoin issuer, interested in developing in Hong Kong, he said that CertiK can help verify Circle's reserves elsewhere to introduce large stakeholders to Hong Kong.
Several platforms withdrew their license applications
After the introduction of the licensing system in Hong Kong, many large international trading platforms were initially attracted to submit applications. However, many platforms later withdrew their applications, including Huobi HK, Gate.HK, OKX and Bybit. In an interview, Gu Ronghui revealed that when communicating with many exchanges, he learned that they believe that "we should be regulated first." It is certainly impossible for these platforms to be fully compliant from the beginning, "but they can be given direction and time to work hard to improve the existing If the scene is close to compliance, the impact on the industry will be greater. "If investors purchase through non-compliant channels, they will be exposed to more risks. Gu Ronghui said bluntly that Hong Kong originally had a first-mover advantage, but now that many governments have begun to issue licenses, these participants will apply for Singapore or Middle East licenses. Talking about the three stablecoin sandbox projects in Hong Kong, Gu Ronghui said bluntly, "Many traditional finance companies may not have done related business at all. They have to think about how to enter this market and what the application scenarios are from scratch." However, Web 3.0 native companies have already Experience and application are then installed into the compliance framework for wider application.
The Hong Kong Monetary Authority hopes that stablecoin issuers will place their reserve assets with licensed banks in Hong Kong for safekeeping and be open to depositing them in other regions and consider them on a case-by-case basis. Gu Ronghui pointed out that if every local government has such a requirement, Circle cannot fulfill it. It is recommended to use a third-party audit agency, such as CertiK, to help verify reserves in other places.