The era of Web3 compliance has arrived, and exchanges are facing new opportunities and challenges.

Recently, a series of initiatives in Hong Kong's Web3 sector have attracted industry attention. It is reported that the Hong Kong Securities and Futures Commission has received over 80 substantial operation reports, and it is expected that ultimately more than 130 virtual asset exchanges will apply for licenses. Although Hong Kong's Compliance policies are relatively lagging, its status as an international financial center still attracts many exchanges to choose to establish themselves here. Industry insiders believe that the potential for Compliance development is huge, and if executed properly, it may change the landscape of the industry.

The cryptocurrency exchange model urgently needs innovation

Traditional financial practitioners entering the Web3 space have found that the current cryptocurrency trading model is relatively simple. It is mainly divided into two categories: first, users trade directly with the order book on the exchange, which has the advantages of speed and the ability to trade standardized products, but the disadvantage is that users lack bargaining power; second, users conduct inquiry trading in social groups, which has the advantage of not requiring asset locking, but there is a risk of fraud. Industry insiders point out that cryptocurrency trading lacks an "over-the-counter trading platform" similar to traditional finance and needs to introduce more diversified trading models.

Challenges Facing Web3 Financial Layout

Under the compliance policies in Hong Kong, many traditional financial institutions are preparing to layout Web3 finance, but they are facing numerous challenges: first, a lack of understanding of virtual assets; second, the unclear outlook makes it difficult to predict investment returns. At the same time, several Web3 exchanges are applying for relevant licenses in Hong Kong, hoping to achieve synergy with traditional financial clients.

CeFi may become a bridge for traditional users to enter Web3

For traditional financial investors in Hong Kong, the threshold for DeFi is relatively high. In contrast, CeFi is closer to their usage habits and easier to get started with. However, achieving compliance in CeFi is not an easy task. Hong Kong has strict regulations on virtual asset trading, imposing high demands on the technology and compliance aspects of exchanges. Whether exchanges can leverage Hong Kong's policies to attract users into the market through CeFi, and then guide them to understand DeFi through education, remains to be seen. However, regardless of the approach taken, user education is crucial.

The contradictions faced by Web3 development

Currently, there is a contradiction in the Web3 industry: projects that can be profitable in the short term often go against the long-term value creation. Developers who truly strive for the development of the industry face survival pressure, while speculative projects receive more attention. To resolve this contradiction, long-term capital support is needed, rather than short-term profit-seeking speculative funds.

Insiders point out that the overall atmosphere in the Web3 industry is currently pessimistic. The "get-rich-quick" model that has formed over the past few years is difficult to sustain, while truly valuable infrastructure projects struggle to gain sufficient support. In the context of global interest rate hikes, the industry faces challenges in its development. In the future, visionary capital needs to be willing to accompany valuable projects for long-term growth.

Despite facing numerous challenges, Hong Kong is still expected to play a significant role in promoting the development of Web3. As a link between the mainland and international markets, Hong Kong has unique advantages in emerging fields such as digital currencies. Industry insiders are calling on the Hong Kong government to adhere to established policies and create a favorable environment for industry development. The professionalism and vitality of Hong Kong's financial market, along with government policy support, are expected to drive new breakthroughs in the Web3 industry.