Hong Kong to accelerate Web3 Innovation with HK$50 million

2023-03-08, 08:32

TL；DR

Hong Kong has budgeted HK$50 million to spearhead cryptocurrency investment in the country.

The investment as well as relevant legislation is likely to attract more web3 firms into the city.

Several big crypto firms such as Huobi Global, ShucangCN and BSC Spartan Network have promised to invest in the city in the near future.

Mainland China might be using Hong Kong as a pilot programme for its future web3 economy.

Introduction

Mainstream adoption of digital assets like cryptocurrencies and NFT is set to increase if the current emerging trends such as government injection of funds into the crypto sector and the introduction of crypto-friendly regulations continue. Hong Kong is one country that has set aside a reasonable amount of money to expand its blockchain technology. This article will discuss Hong Kong’s current thrust in the blockchain industry.

Hong Kong’s blockchain industry growth

In a show of confidence in the power of the blockchain, Hong Kong has unveiled HK$50 million to develop its web3 businesses in order to compete in the global digital economy. However, part of the funds will be used to establish crypto regulations which may increase confidence in Hong Kong’s blockchain infrastructure aimed at attracting web3 firms to launch their businesses in the city.

Hong Kong- Coindesk

In the 2023-2024 budget speech, Paul Chan, the city’s Financial Secretary said, “The third generation Internet (Web3), currently in its start-up period, has the same huge potential. We must keep up with the times and seize this golden opportunity to spearhead innovation development.”

He added, ““I will allocate $50 million to expedite the Web3 eco development by, among other things, organizing major international seminars, to enable the industry and enterprises to better grasp frontier development and to promote cross-sectoral business co-operation, as well as arranging a wide array of workshops for young people.”

In addition, Chan promised to establish a task force that would look into how best to spearhead web3 innovation in Hong Kong. One of the key aspirations of the city is to lure back crypto investors from mainland China who have relocated to other countries such as Singapore. Among the expected investors is Justin Sun who indicated through a tweet that he will soon relocate to Hong Kong.

Sun also indicated that the current stance shows the Chinese government support for web3 in Hong Kong. He said, “The changing attitude of the Hong Kong government towards crypto signals a nod from the Chinese central government granting pilot status to HK for some forward-looking experiments on how crypto can be best adopted and localised for the huge Chinese market at large. ”

There is no doubt that the $50 million set aside for developing the blockchain sector in the country presents a “golden opportunity” for firms that aim to establish their crypto projects in Hong Kong.

Sun, who is a World Trade Organisation representative, added that there are several large crypto firms like Huobi Global that are willing to come to the city. Aside from crypto exchanges, market makers and hedge funds are likely to flock to Hong Kong as well.

There is also high expectation that NFT and metaverse firms are likely to come to Hong. As an example, ShucangCN, a leading NFT firm, told Forkast that it aims to open a branch in Hong Kong. Another big crypto player that has promised to open a branch in Hong Kong is BSN Spartan Network, a Chinese blockchain which is currently operating outside China.

Hong Kong’s crypto regulation

Apart from the $50 million investment in web3, Hong Kong is also working on establishing crypto friendly regulations in the country. Recently, the Hong Kong’s Securities and Futures Commission (SFC) published regulatory guidelines for virtual asset trading platforms. However, it has asked for feedback from the public

Crypto regulation- Thenewscrypto

Part of the legislation will establish the requirements for licensing crypto trading platforms and registration of the digital assets. The proposed regulations will be effective from June this year, meaning that firms in the affected sector should comply with law by that time. The SFC will also check on the liquidity of the involved entities like exchanges.

In addition, the proposed regulations will have a clause that prohibits flighting misleading crypto advertisements. As a result, there will be penalties for individuals and firms that carry out fraudulent transactions. For instance, offenders may be liable to a fine of $10,000,000 and a jail term of 10 years.

Is Hong Kong a Pilot Programme for Mainland China?

Several analysts have pointed out that the friendly stance which Hong Kong is taking towards cryptocurrencies and other digital assets is a sign of approval from China. As such, China may be taking the cryptocurrency investment in Hong Kong as a pilot programme. This is because officials from the mainland have been taking part in some gatherings in recent months.

In light of their friendly and cooperative gestures with crypto investors, analysts have concluded that China has a change of heart, from its hard stance on cryptocurrency which led it to ban trading of cryptocurrencies in 2021. In fact, its crackdown on cryptocurrencies started way back in 2017.

Right now, China’s softening stance acts as a cue for Mainland crypto firms and web3 start-ups in Hong Kong to open crypto businesses in the city. Therefore, the city may act as an intermediary for web3 firms that plan to invest in China in the future.

Conclusion

The HK$50 million set aside by the city will be used to fund the development of Hong Kong’s blockchain eco in its bid to become competitive on the global stage. Furthermore, the city is in the process of crafting the relevant crypto regulation. Both developments should enable the city to attract much crypto investment.

Author: Mashell C., Gate.io Researcher

*This article represents only the views of the researcher and does not constitute any investment suggestions.

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