Author: Mankun
As a policy high ground for Asia's Web3.0, the Hong Kong government has a positive attitude towards the development of crypto assets. As early as October 2022, the Hong Kong government issued the "Policy Statement on the Development of Virtual Assets in Hong Kong", in which the Secretary for Financial Services and the Treasury, Christopher Hui, pointed out that "Distributed Ledger Technology (DLT) and Web 3.0 have the potential to become the future of finance and business."
Now, as global crypto currency policies continue to evolve, Hong Kong Legislative Council member Eunice Wong has questioned the Hong Kong government about Hong Kong's digital asset policies, focusing on fiscal reserves, the Exchange Fund, and the crypto asset regulatory framework. This legislative council inquiry will further help us understand the Hong Kong government's latest attitude towards crypto assets. In the future, Hong Kong will further promote the development of the Web3 industry and continue to improve the crypto policy regulatory framework, as follows:
As early as this June, a research report by ICBC International stated that TRON, through its mathematical consensus mechanism, has successfully maintained a scarcity similar to gold, while Ethereum is hailed as "digital oil" due to its unique technology. In this inquiry, Eunice Wong also hailed TRON as "digital gold" - the advantages of TRON need not be elaborated, as it has broken through $100,000 per unit this month, also demonstrating the market's full recognition of TRON's unique value at present. In any case, the development of the world's currency will "move towards digitalization", such as cross-border payments and central bank digital currencies.
The legislator asked whether the Hong Kong government would consider including digital assets and cryptocurrencies in the fiscal reserves and consider using the Exchange Fund to continuously purchase and hold them in the long term. The Under Secretary for Financial Services and the Treasury, Chan Ho-lim, gave an affirmative answer, stating that although crypto assets are not the target assets for investment by the Exchange Fund, in the operations of external investment managers, "there may be individual investments involving crypto assets".
The Hong Kong government acknowledged that the Exchange Fund will include investments in crypto assets, although "the relevant proportion is very small". Data released by the Hong Kong Monetary Authority (HKMA) on November 29 showed that as of October 31, 2024, the total assets of the Exchange Fund were HK$40,150 billion. As Hong Kong, China, which has been among the top ten in the world in terms of foreign exchange reserves for many years, even if the proportion of crypto asset investment is small enough, it will be a surprisingly large figure in the face of a huge base.
For the regulatory authorities of crypto assets, Hong Kong has already laid the groundwork. The Financial Secretary established a dedicated task force to promote the development of Web3 in 2023, and made recommendations to the Hong Kong government on the sustainable and responsible development of the industry; in terms of specific regulatory policies and measures, the Financial Services and the Treasury Bureau is responsible for the relevant policy formulation work and coordinates with various relevant departments and financial regulatory authorities.
Currently, the Hong Kong government has introduced a licensing regime for virtual asset service providers through amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615). This month, the Financial Services and the Treasury Bureau consulted the Legislative Council's Financial Affairs Committee on the regulatory regime for issuers of fiat-linked stablecoins, and will submit the relevant bill to the Legislative Council within this month. In addition, the regulatory and licensing regime for OTC trading and custody services of VAs is also on the agenda.
As the Under Secretary for Financial Services and the Treasury, Chan Ho-lim, said, Hong Kong is a leading international financial center in Asia and has an important influence on the regulation and development of crypto assets. As a major participant in the global crypto asset field, Hong Kong is constantly strengthening its position in the development of the world's Web3 industry through a sound regulatory framework, policy innovation, and international cooperation. For Web3 entrepreneurs, especially those with a mainland background, Hong Kong not only provides a fertile ground for Web3 development backed by the mainland, but also provides an important springboard to the global market.
We look forward to the Hong Kong Securities and Futures Commission further clarifying its crypto asset regulatory policies by 2025, which will help increase the certainty of cryptocurrency regulation, encourage more Web3 practitioners to come to Hong Kong to start businesses, and further consolidate Hong Kong's position as a global crypto asset hub. Lawyer Mankun is also committed to providing comprehensive legal support for Web3 practitioners, helping clients leverage policy dividends and seize market opportunities to achieve long-term sustainable development globally.
