Hong Kong is a special administrative region of China that has been advancing its crypto industry rapidly. The city has a vision of becoming a dominant hub for crypto and Web3 activities, which are based on decentralised technologies such as blockchain. To achieve this goal, the city has implemented various policies and measures to create a supportive environment for crypto innovation and adoption.
Crypto Sector Growth
The city’s efforts have drawn the attention of the global crypto community. The Financial Secretary of Hong Kong, Christian Hui, said that more than 80 companies that deal with virtual assets have indicated their interest in setting up their operations in the city. Hui shared this information during his speech at the Aspen Digital Web3 Investment Summit on March 20.
Hui said that the interest from crypto-related companies has risen considerably since October 2022, when the government of Hong Kong announced its Virtual Asset Development Policy. This policy aims to establish a comprehensive and transparent regulatory system for its crypto sector. According to Hui, this plan could be more beneficial for the city and attract more quality crypto companies to set up businesses in Hong Kong.
Some of these companies include blockchain infrastructure firms, blockchain network security companies, and virtual asset (VA) exchanges. These companies offer various services and solutions for the crypto and Web3 sectors in the city.
Licensing Regime
One of the key aspects of the policy is the licensing regime for virtual asset service providers (VASPs), which will come into force in June 2023. The Securities and Futures Commission (SFC) of Hong Kong is currently accepting submissions for feedback on its licensing regime until March 31. The licensing regime proposes that all operational centralised crypto trading platforms in the city must obtain a licence from the SFC.
The licensing regime aims to ensure that VASPs comply with anti-money laundering (AML) and counter-terrorist financing (CTF) rules, as well as protect investors’ interests and market integrity. The SFC will also supervise VASPs’ activities and conduct regular inspections.
Web3 Development
Besides regulating its crypto sector, Hong Kong has also demonstrated its commitment and support in developing Web3 technology and applications within the city. Secretary Hui said that Web3 technology offers a paradigm shift filled with great opportunities from the internet era.
Web3 technology refers to a new generation of internet applications that are built on decentralised platforms such as blockchain. These applications enable users to have more control over their data, identity, and assets, as well as interact with each other in a peer-to-peer manner.
Hui emphasised that the government of Hong Kong values the sector highly. So it plans to make the city a leading hub for Web3 within Asia and worldwide. It boasts a robust fintech ecosystem comprising more than 800 fintech firms that provide various types of financial and innovative services for the public.
In December 2022, the government also launched an online community platform where local enterprises could interact with fintech companies. This move was part of its plans to help fintech startups in expanding their business to other regions in China and beyond.
Conclusion
Hong Kong has shown its potential as a hotspot for crypto and Web3 businesses with its progressive policies and supportive measures. The city aims to create a vibrant crypto environment to position itself as a prominent centre for crypto and Web3 interactions.
