Recently, Hong Kong media have reported that since the listing of virtual asset ETFs in Hong Kong, the market trend has become increasingly positive, showing strong vitality and broad development prospects. This positive market feedback is not only due to investors' enthusiasm for virtual asset ETFs, an innovative financial product, but also due to Hong Kong's unique status as an international financial center and the continuous optimization of the regulatory environment.

Jiang Zhaosheng, a senior researcher at OKLink Research Institute, said in a recent interview with Ta Kung Pao, Hong Kong Commercial Daily and other Hong Kong media: "Hong Kong is now completing the transformation from a 'follower' to a 'leader' in the field of virtual assets. Whether it is the speed at which it accepts virtual asset ETF applications and formally approves them, or the firm attitude of allowing physical subscriptions and redemptions, it can be seen that Hong Kong is determined to develop virtual assets. It cannot be ignored that Hong Kong's importance in the field of virtual assets is continuing to increase."

Image: Hong Kong media reports on Hong Kong virtual asset ETF interview with OKEx

In the second episode of "Web3 Relativity" produced by OKEx and Sina Finance today, Jiang Zhaosheng talked with Zhu Haokang, head of digital asset management and family wealth management of China Asset Management (Hong Kong) and analyzed:

The launch of virtual asset spot ETF products is an important node in the development of the financial market in Hong Kong and even Asia. Not only because new investment targets have been added, but more importantly, it further strengthens the integration of virtual assets and traditional financial systems, which is expected to bring more innovative vitality to the financial market and continuously improve the financial ecology.

The following is a selection of content from this program, focusing on analyzing the two major areas of Hong Kong’s financial ecology and risk control supervision for reference and reference by industry professionals.

Topics & Insights

Topic 1: The outside world believes that Hong Kong has not yet found a focus on the value support of virtual assets in financial innovation

Jiang Zhaosheng: First of all, let me express my point of view. Hong Kong is completing the transformation of its role from "follower" to "leader" in the field of virtual assets. Compared with the United States, although Hong Kong's voice and influence still need to be improved, its importance is becoming increasingly significant. Although the approval of virtual asset spot ETFs seems to be following the pace of the United States, Hong Kong’s determination in developing virtual assets may be seen in the speed with which it accepts applications to formal approval, or in its firm attitude towards allowing physical redemptions.

Over the past year, OKLink Research Institute has observed the development of Hong Kong in the field of virtual assets and Web3. From VATP, Hong Kong dollar stablecoin, to virtual asset spot ETF, Hong Kong has demonstrated a series of innovations and breakthroughs that are different from the United States and overseas. For example, a new licensing method is adopted in the regulation of stablecoins instead of incorporating them into the payment system; the world's first batch of tokenized green bonds issued by the government are issued to promote innovative applications at the technical level; at the level of virtual asset spot ETF, Hong Kong not only allows physical redemption and retail investment, but also approved the Ethereum spot ETF before the United States. With these, it is difficult for us to say that Hong Kong has no innovation in the field of virtual assets.

More importantly, Hong Kong is becoming a "connection point" and "bridge" in the field of virtual assets. By incorporating the supervision of virtual assets' own deposit and withdrawal channels and accelerating the integration and connection of traditional finance and virtual assets, Hong Kong is strengthening its "connection" attributes and improving asset security and compliance protection. With its role as an international financial center and its superior geographical location, Hong Kong has become a bridge between the Chinese market and the global business network, and also has unique advantages in the fields of virtual assets and Web3. The current practices have the potential to support future value.

Topic 2: As Hong Kong Web3 regulation gradually gets on track, some people believe that strict regulation will hinder the pace of financial innovation.

Jiang Zhaosheng: The rebalancing of financial regulation and financial innovation has been a topic of long-term concern to all sectors of society. The relationship between the two is similar to the "cat and mouse game" in a dynamic game. Using the innovative development of digital technology to reduce costs and increase efficiency of financial services is the core of financial innovation; but without proper financial regulation, technological innovation may increase information asymmetry, thereby exacerbating the potential risks of the financial system and making financial innovation a "cover" for various financial scams.

To balance innovation and regulation, we need to ensure that strict regulation does not discourage innovation and enhance technology regulation capabilities. We must adhere to the principles of "technological neutrality" and "regulatory neutrality" because the quality of technology does not depend on the technology itself, but on how it is used. We cannot let improper application and application risks affect differences in regulatory attitudes towards technology.

Back to the topic of virtual asset regulation, the premise for Hong Kong to develop virtual assets is to balance regulatory compliance requirements with industry development needs, while taking into account technological innovation and financial stability. The key to achieving this goal is that the regulatory authorities can timely and accurately grasp the current status and development laws of the virtual asset market, thereby eliminating the information gap and time gap between regulation and innovation. The application of emerging technologies is very important in this regard.

Hong Kong’s Web3 innovation is flourishing, and financial regulation is a means rather than an end

As mentioned above, financial regulation is intended to maintain financial stability and protect the rights and interests of investors. It is not an end, but a means. The principle of "technological neutrality" should be implemented throughout. In the booming Hong Kong Web3 market, cutting-edge technologies such as blockchain and big data are not only a powerful driving force for the development of digital finance, but are also expected to become an important line of defense for preventing risks and safeguarding security.

As a Web3 technology company with many years of experience, OKLink is committed to providing financial institutions, Web3 projects and regulatory agencies with a full range of on-chain data solutions based on its accumulated massive on-chain data resources and technical service experience. By building a "digital firewall", OKLink has set up a solid barrier between Web3 innovation and risk, helping all parties improve their ability to prevent and respond to risks, and safeguarding the steady development of Hong Kong's Web3 ecosystem.

As more countries and regions recognize the huge value of virtual assets and the Web3 industry, the industry's compliance process is also accelerating. I believe that on-chain data will have more integration with financial innovation.

• The content of this article is for reference only and does not constitute any investment advice

This article is authorized to be reproduced from "OKLink Dialogues with China Asset Management (Hong Kong): A Brief Analysis of Hong Kong Virtual Asset ETF + Financial Regulatory Trends", author: OKLink