Hong Kong financial secretary Paul Chan Mo-po published a statement in an official government blog post on April 9, advocating for the embrace of Web3 technology even amid the fluctuating crypto market.
He wrote the statement ahead of a two-day digital economy summit hosted by the government on Thursday. Industry leaders from Alibaba, Baidu, Huawei and other giants will participate as headline speakers.
The summit will also feature speeches from prominent figures such as Hong Kong chief executive John Lee Ka-chiu, the deputy director of China’s cyberspace administration Cao Shumin and the deputy director of Beijing’s liaison Office Chen Dong.
Chan explained that Hong Kong intends to promote the innovative development of Web3 by adopting a strategy that emphasizes appropriate regulation and development promotion. He maintained that this move would help Web3 technology take a steady path forward.
Chan also mentioned that Hong Kong’s plans include ensuring financial security, mitigating systemic risks and implementing measures for investor education, protection and anti-money laundering.
In line with Chan’s views, some local experts assert that Hong Kong should prioritize the development of Web3 without delay. Joseph Leung Wai-Fung, a lecturer at Polytechnic University and an IT sector veteran, noted that Hong Kong is falling behind Singapore regarding Web3 development.
Leung cited examples such as Singapore’s Blockchain Challenge — a program that offers funding and mentorship to startups for building applications and the Financial Sector Technology and Innovation Scheme. It promotes the expansion of fintech initiatives.
Current situation in the crypto market
According to Chan, the cryptocurrency industry has been experiencing the same phenomenon as the early 2000s Internet era, where the market eventually became more stable after the “bursting of the bubble.”
He also explained that once the hype surrounding speculation fades away, the major players in the industry will shift their focus toward competing in technological innovation, creating practical applications and generating value.
In the blog post, Chan wrote that the path of innovation and technological advancements has always been challenging. He added that even if the development direction is specific, the path needs to be determined step by step.
Financial Secretary Paul Chan didn't make it back to Hong Kong for the start of Fintech Week, delivering opening speech via Zoom.
"In a great many ways, we're telling the world that we're back. Back in business, back in the business, and pleasure, of welcoming you to Hong Kong." https://t.co/o9Qs5wI1sn pic.twitter.com/DWkGThoAcW
— Aaron Busch (@tripperhead) October 31, 2022
Hong Kong as potential hub for crypto industry
The United States’ strict approach to regulating crypto assets has prompted some to speculate that the industry’s “center of gravity” may shift elsewhere — like Hong Kong, which has adopted a distinct approach, making it a more suitable hub for the cryptocurrency sector.
Crypto exchange Gate.io recently revealed plans to establish a foothold in Hong Kong, taking advantage of the government’s proposed HK$50 million ($6.4 million) investment into Web3 technology as outlined in the city’s 2023-24 budget.
Hong Kong’s secretary for financial services and the treasury, Christian Hui, announced in a speech on March 20 that the region has been garnering attention from global crypto companies since October 2022.
He also mentioned that the government has been considering the regulation of stablecoins, cryptocurrencies that have their value tied to the value of another currency or commodity.
Hong Kong’s government proposed a bill to regulate cryptocurrency in October last year. On February 20, the Securities and Futures Commission (SFC) of Hong Kong unveiled a crypto exchange regime proposal set to begin in June.
Executive chairman of the Chinese Big Data Society, Witman Hung Wai-man, proposed that government should make efforts to accelerate the establishment of a regulatory framework that safeguards the interests of investors.
Hung emphasized the importance of investor education and the difficulty of valuing digital assets. He pointed out that uncertainty and changes in market sentiment can quickly cause sharp fluctuations in market values — leading to potential risks for investors.