Yesterday Hong Kong Financial Secretary Paul Chan compared the status of the web3 sector to the post dotcom bubble period when many of the leading brands gained traction. While Hong Kong has been portrayed of late as becoming more crypto-friendly, Chan still talked about controlling risks, regulation and mentioned multiple real world use cases more typical of enterprise blockchain.
Chan penned a blog post over the weekend about upcoming digital events on the island. He opened up about why there has been an apparent change of heart in Hong Kong. “The global competition for the development of Web3 is also deepening. The competition is about who can create the largest space for application and innovation under the premise of controllable risks,” he wrote.
When he gave examples of the potential innovations, he mentioned the transparency of tokenization, particularly regarding green bonds, where Hong Kong tokenized $100 million in February. Chan also referred to supply chains and trade finance, another area where Hong Kong has been active for years. It launched eTradeConnect as a trade finance platform back in 2018 with strong links with China. GSBN, the private blockchain shipping network that includes COSCO Shipping and Hapag Lloyd as backers, is also based in Hong Kong.
Relaxing Hong Kong’s approach to crypto
Turning to cryptocurrencies, Hong Kong is opening up to virtual currencies a little. In 2018 it introduced its first licensing regime for exchanges and service providers, which targeted institutional investors, with only two licenses issued so far.
Last year it signaled it was more receptive to allowing retail investor access, and in February this year launched a consultation around a new licensing regime intended to start in June 2023. This will impose limits on financial exposure for retail users depending on their circumstances, such as their net worth. Hong Kong is also studying the regulation of stablecoins.
In February, Hong Kong allocated a HK$50 million budget for Web3 to Cyberport, a Hong Kong technology accelerator and ecosystem developer.
This is where Chan compared cryptocurrencies and web3 to the dotcom era. He sees the benefits of transparency, efficiency, security and disintermediation and also mentions the ability of decentralization to counter the power of monopolies and platforms.
