Now is the “right time” for Hong Kong to push forward with Web3, despite the crypto market fluctuations, according to the financial secretary of Hong Kong.
In an April 9 blog post, Paul Chan explained that one of the three major directions he has proposed in the city's budget was for the further development and application of Web3.
Translated, Chan wrote that for “Web3 to steadily take the road of innovative development” Hong Kong will “adopt a strategy that emphasizes both ‘proper regulation’ and ‘promoting development.’”
Chan says the region also plans to focus on financial security, preventing systemic risks and focus on investor education, protection and measures around anti-money laundering.
In October last year, the government of Hong Kong floated the idea of introducing a bill to regulate crypto.
By Feb. 20 of this year, Hong Kong’s Securities and Futures Commission (SFC), the local securities regulator, released a proposal for a regime for cryptocurrency exchanges set to take effect in June.
The industry has been suffering a savage bear market and setbacks with exchange collapses and ongoing scrutiny from regulators.
According to Chan, the industry is simply going through the same process as the internet in the early 2000s, and after the “bursting of the bubble,“ market participants became much calmer.
“After the tide of speculation ebbs, the remaining powerful players will focus more on competing in technological innovation, practical application and value creation, and contribute to improving the quality of the real economy," Chan wrote.
“In the next stage, market participants need to develop blockchain technology more deeply, so that its characteristics and advantages of transparency, efficiency, security, disintermediation, de-platformization, and low cost can find wider application scenarios and solve more existing problems.”
Hong Kong’s approach to crypto regulation greatly contrasts that of the United States, which has adopted a more hardline response that’s led to speculation that the crypto industry’s “center of gravity" will shift to Hong Kong.
Related: Hong Kong crypto firms seeing interest from Chinese banks: Report
Cryptocurrency exchange Gate.io has already announced plans to launch a presence in Hong Kong following the local government’s planned 50 million Hong Kong dollar ($6.4 million) cash injection into Web3 in the city’’s 2023-24 budget.
In a March 20 speech in Hong Kong, the secretary for financial services and the treasury, Christian Hui, stated that Hong Kong has been attracting “interest” from various crypto firms worldwide since last October.
“The road of innovation and technological change has never been smooth sailing,” Chan said in his latest post.
“Even if the development direction is locked, the actual path has to be worked out step by step; only by persisting in trying can we find new solutions and new ways out,” he added.
Magazine: US enforcement agencies are turning up the heat on crypto-related crime