Author: Lesean, MetaEra
On October 31, 2022, an online AMA session titled "The Tide Rises in Hong Kong, Interpreting Hong Kong's Crypto New Policy" was launched on Twitter Space. This one-hour live broadcast brought together several heavyweight figures from the Chinese-speaking blockchain community, with hundreds of thousands of people flocking to the live stream, as if it were a carnival, or a rallying cry for the launch of a grand ship.
At that time, the Hong Kong SAR government had just released the "Policy Statement on the Development of Virtual Assets in Hong Kong", in which the government outlined its policy position and guidelines: it will cooperate in the legal and regulatory system to provide a convenient environment.
In the blink of an eye, two years have passed. Web 3.0 in Hong Kong has gone from a spark to an unstoppable wildfire. And that live broadcast with hundreds of thousands of viewers was the starting point of MetaEra's dream, and the initial aspiration for us to stand firm in Hong Kong. From the very beginning, MetaEra has been positioned as a "globally leading media based in Hong Kong", with its influence radiating across Asia and the world.
In early December 2024, Keng Chin-ping, a director of Hong Kong Cyberport Management Company Limited and chairman of Nano Labs, shared at a forum: "It was Hong Kong's positive attitude first, and then the Trump administration's development of digital currency, that led to the rapid breakthrough of Bitcoin price above $100,000. I am optimistic about Hong Kong's development in the field of digital encryption and even the entire Web 3.0 field, and Hong Kong may surpass New York to become the world's financial center."
This view is not without foundation. Looking at the development of Web 3.0 in Hong Kong in 2024, while building a more stable and convenient market environment, it has also been leveraging its long-standing advantages as a financial center.
Orderly Compliance, Steady Progress
Unlike other regions, Hong Kong's process of promoting the development of Web 3.0 is orderly and compliant. To avoid rampant growth, while granting freedom, it has focused on updating laws, industry regulation, issuing licenses, and promoting stablecoins. Especially as an established financial center, Hong Kong's strict requirements and transparent standards for financial licenses and Virtual Asset Service Provider (VASP) licenses provide a safer way for relevant customers. On June 1, 2023, the Hong Kong government officially launched the application for Virtual Asset Service Provider (VASP) licenses, and required VASPs to submit license applications by February 29, 2024 at the latest. As of December 18, 2024, there are seven licensed virtual asset trading platforms (VATPs) in Hong Kong, including OSL Exchange, HashKey Exchange, HKVAX, Yunzhanghao Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group, and Thousand Whales Technology.
Stablecoins, as a type of virtual asset that aims to maintain a relatively stable value relative to certain assets (usually currencies), can further facilitate the interconnection between Hong Kong's traditional finance and virtual asset markets. In January 2024, to further promote the legislative process of the stablecoin regulatory framework, the Hong Kong Monetary Authority (HKMA) issued a consultation paper proposing more detailed regulatory measures and for the first time clearly defining Fiat-Referenced Stablecoins (FRS); on March 12, 2024, the HKMA officially launched a regulatory sandbox for Hong Kong dollar stablecoins, providing an effective channel for the HKMA and the industry to exchange views on the proposed regulatory regime; in the same month, to support the development of Hong Kong's tokenization market, the HKMA launched a new wholesale Central Bank Digital Currency (wCBDC) sandbox project called Ensemble. This sandbox has put Hong Kong at the forefront of stablecoin legislation compared to most other parts of the world.
In July 2024, the HKMA and the Financial Services and the Treasury Bureau issued a "Consultation Conclusions Report on Legislative Proposals for Implementing a Regulatory Regime for Stablecoin Issuers in Hong Kong", in which the HKMA for the first time explicitly accepted the tokenized form of high-quality and highly liquid assets as the reserve assets of issuers. On July 18, the HKMA released the list of participants in the "sandbox" for stablecoin issuers, including Standard Chartered Bank in partnership with Animoca and Circle, PCCW, and JD Digits.
On December 6, the Hong Kong government published the "Stablecoin Bill", aiming to introduce a regulatory regime for fiat stablecoin issuers in Hong Kong, and it was first read on December 18. The bill aims to improve the regulatory framework for virtual asset activities, address the potential risks posed by fiat stablecoins to financial stability, ensure adequate protection for users, and further consolidate Hong Kong's position as a global center for stablecoin development and regulation.
In terms of Real World Assets (RWA), the HKMA issued a circular on "Sale and Distribution of Tokenized Products" in February this year to strengthen the management of institutions launching tokenized products; the Hong Kong Securities and Futures Commission stated in May that RWA investment may be opened to retail investors to attract more capital and FinTech talent to Hong Kong. In August, Ant Digital Technology announced a successful RWA (Real World Assets tokenization) financing of about 100 million RMB in Hong Kong in cooperation with Lanxin Group, which was selected as one of the first RWA tokenization cases in the HKMA's Ensemble sandbox project. On October 28, during the Hong Kong FinTech Week, Ant Digital Technology again publicly stated that it will focus on RWA business in Hong Kong and launch a "two-chain one-bridge" platform.
On August 28, 2024, the HKMA officially launched the "Ensemble" sandbox program, which will use experimental tokenized currencies to facilitate interbank settlements and focus on researching tokenized asset transactions, marking the Hong Kong government's forward-looking layout in the field of tokenized assets and demonstrating its determination to become a global RWA tokenization center.
Multi-Party Support, Building an Ecosystem
As early as 2022, the Hong Kong government's declaration pointed out that as an international financial center, Hong Kong will support the innovation and ecosystem of international virtual asset businesses. The government will take the lead in issuing Non-Fungible Tokens (NFTs), promote the tokenization of green bonds and the digital Hong Kong dollar, and the Hong Kong Stock Exchange will launch Asia's first virtual asset ETF products, allocating 50 million Hong Kong dollars to support the Hong Kong Web 3.0 ecosystem. From June 1, Hong Kong has become the first region in the world to regulate and license virtual asset trading platforms. On April 11, 2023, Hong Kong Chief Executive John Lee attended the inauguration ceremony of the Hong Kong Web 3.0 Association and delivered a speech, clearly conveying Hong Kong's determination to develop Web 3.0, and hoping to provide services for the ecosystem development of Web 3.0 through industry associations and other organizations.
Hong Kong has been increasingly investing in Web 3.0 in terms of policies, corporate support, and talent cultivation in 2024. On January 4, 2024, the "New Opportunities for Digital Economy Development Summit" was successfully held at the Hong Kong Convention and Exhibition Centre, and the Hong Kong Web 3.0 Standardization Association (W3SA-HK) was established. The aim is to build industry consensus, promote technological innovation, regulate the industry ecosystem, support government decision-making, and expand Hong Kong's international influence and voice in the Web 3.0 field. On May 30, 2024, Cyberport announced the establishment of the "Web 3.0 Investment Circle" under the "Cyberport Investment Network", aiming to build a dedicated investor network in the Web 3.0 field to promote investment in Web 3.0 projects. In October, Cyberport and Silicon Valley venture capital firm Draper Dragon jointly established the "Cyberport Draper Dragon Web 3.0 Accelerator" to actively promote the startup ecosystem of Web 3.0 in Hong Kong. The Hong Kong Web3 and Virtual Assets Development Subcommittee proposed to increase investment in Cyberport and the Hong Kong Science Park, and by December, Hong Kong had nearly 300 Web 3.0-related companies.
On the second anniversary of Hong Kong's new crypto policies, Chief Executive of the HKSAR, John Lee, announced the 2024 Policy Address, which focused on increasing the development of "new productivity", establishing a HK$10 billion "Innovation and Technology Industry Catalyst Fund"; optimizing the "Innovation and Technology Venture Fund"; and allocating HK$180 million to launch the "Innovation and Technology Accelerator Pilot Scheme" to match market funds and attract professional startup service organizations from home and abroad to set up in Hong Kong, proposing more specific measures to consolidate its position as a financial center and attract international high-end talents.
Web3Labs, a leading incubator focused on the Web 3.0 field, has been working to build a global startup hub for the Web 3.0 industry based on the government's declaration, allocating $10 million to provide full-ecosystem services and hosting online and offline events. On November 11, Web3Labs set up a brand-new offline Web 3.0 industry base - the Web3Labs HK Center in Causeway Bay, Hong Kong, leveraging Hong Kong's unique geographical location, financial advantages and open business environment to apply Web 3.0 technology to a wider range of fields, providing support and assistance to more entrepreneurs and promoting the industry's steady development. Web3Labs also officially announced joint "acceleration programs" with DFINITY Foundation, KuCoin Labs, TON and other institutions in 2024, providing underlying technology and financial support for the development of the industry ecosystem.
On November 27, the Web3 and Virtual Assets Development Subcommittee of the Hong Kong Legislative Council publicly invited opinions from all sectors on the development of Web 3.0 and virtual assets, aiming to further promote the development of Hong Kong's Web 3.0 and virtual asset industries. The focus is mainly on licensing and sandbox regulations related to virtual asset trading, as well as the development of the Web3 ecosystem.
International Web 3.0 Events Boost Hong Kong's Industry Ecosystem
The Web 3.0 wave has swept through Hong Kong, and various large-scale international events have also landed in Hong Kong, providing a platform for industry players to exchange and cooperate, and also bringing the world's attention to Hong Kong. Each major event has brought a wealth of innovative ideas and collaboration opportunities.
On April 6, 2024, the "2024 Hong Kong Web3 Carnival" was held at the Hong Kong Convention and Exhibition Centre. As a major event in the cryptocurrency field, the three-day carnival attracted 30,000 participants and featured over 150 sub-events. The event was star-studded, with the presence of Hong Kong Financial Secretary Chan Mo-po, Legislative Council member Yiu Tak-kuen, the Innovation, Technology and Industry Bureau, the Hong Kong Trade Development Council, Cyberport, the Hong Kong Monetary Authority and other heavyweight guests, as well as many well-known Web 3.0 practitioners. This event has become the annual flagship event for Hong Kong's Web 3.0. During the event, MetaEra, as an important partner, hosted a series of activities such as the Hong Kong Crypto Finance Forum and the Hong Kong Web 3.0 Ecosystem Welcome Reception, connecting Hong Kong's renowned Web 3.0 institutions and guests while providing rich event content.
On May 9 and 10, 2024, the Bitcoin Asia Summit 2024 grandly opened at the Kai Tak Cruise Terminal in Hong Kong. The Bitcoin Summit has always been held in the United States, and its first Asian edition being hosted in Hong Kong demonstrates Hong Kong's important position in Web 3.0 and its determination and courage to build Hong Kong into a global cryptocurrency center.
In November 2024, the one-week FinTech event - Hong Kong FinTech Week - was held at the Asia World-Expo, attracting over 100 economies and more than 30,000 participants. The forum topics focused on artificial intelligence, Bit, Hash, Non-Fungible Tokens, financial innovation, etc. Notably, the proportion of regulators and traditional financial institutions among the attendees and speakers has increased, and the collision between tradition and innovation has provided a new direction for the development of Web 3.0 in Hong Kong.
The Development of Web 3.0 and Its Impact on Financial Innovation in Hong Kong
On February 8, 2024, the Hong Kong government launched a public consultation on the legislative proposal to establish a licensing regime for virtual asset over-the-counter (OTC) service providers. This means that the OTC virtual currency market in Hong Kong will enter the compliance era. After all, the collapse of JPEX in 2023 was closely related to the virtual currency OTC service provider Crypto Panther. The Hong Kong government hopes to provide users with more protection and remedies through effective regulation and clear industry standards.
On April 30, 2024, six virtual asset spot ETFs were officially listed on the Hong Kong Stock Exchange, including Bitcoin and Ether spot ETFs from fund managers such as China Universal Asset Management (Hong Kong), Bosera International, and Harvest Global Investments. These six ETFs differ in terms of product fees, trading, issuance, and virtual asset platforms. The listing day was seen as a historic moment for Hong Kong's capital market, as the launch of the Ether spot ETF was a full three months earlier than in the United States.
Entering the second half of 2024, the strong support for Bit from the incoming US President Trump ignited market enthusiasm, leading to a powerful growth wave in the Bit market, which even broke through the $100,000 mark on December 5, setting a new historical record. Hong Kong's virtual asset spot ETFs also hit new highs, especially the Bit ETF launched by Nanjing Nanfang Dongying, a subsidiary of Nanjing Nanfang Fund Management, which had a cumulative year-to-date return of 87.88% as of November 12.
At the same time, Bit concept stocks also surged, and as Bit broke through the $100,000 mark, BOYA Interactive (00434.HK), Xiongzhou Technology (08267.HK), and Meitu (01357.HK) rose 22.49%, 14%, and 6.29% respectively. Affected by global economic uncertainties and investor confidence, Bit concept stocks have seen high volatility, but the overall potential is huge, and it is believed that there will be stronger upward momentum in the future.
In the hedge fund, private equity fund, and some family office sectors, Hong Kong plans to exempt investment returns in Bit and other alternative assets from taxation to enhance Hong Kong's attractiveness as a wealth management center.
On November 25, Hong Kong digital bank ZA Bank launched a virtual asset trading function in its App for retail users, becoming the first bank in Asia to provide cryptocurrency trading services to retail users. At the same time, HashKey Exchange, the largest licensed virtual asset exchange in Hong Kong, announced the launch of HashKey Pro, supporting API trading, block trading services, and enterprise-level account structure and permission management, providing user asset insurance and trading matching engine for institutional investors. The cooperation between ZA Bank and HashKey Exchange represents a new trend of collaboration between the traditional banking system and the digital currency ecosystem, providing stronger competitive advantages for the development of the Web 3.0 ecosystem in Hong Kong.
On December 12, HashKey Exchange announced that its asset size has reached a historic high of HK$10 billion for the first time, and its cumulative trading volume has reached HK$580 billion by 2024.
The US Ignites the Fire of Hong Kong's Web 3.0, Burning Brighter and Brighter
At this new historical juncture, Trump announced the Bitcoin strategic reserve plan in a high-profile manner, adding more momentum to the development of Bitcoin. While other parts of the world are responding to the US and planning to include Bitcoin in their national strategic reserves, Hong Kong has also shown a friendly attitude: at the Legislative Council meeting on December 11, legislator Ng Kit-chung suggested to the Acting Secretary for Financial Services and the Treasury, Chan Ho-lim, that the government consider including digital assets and cryptocurrencies in the fiscal reserves and use the Exchange Fund to continuously purchase and hold them in the long term. Chan Ho-lim responded mildly, indicating that cryptocurrencies are likely to be included in the fiscal reserves.
Prominent Figures Ride the Waves, Promoting the Development of Hong Kong's Ecosystem
The rapid and healthy development of Hong Kong's Web 3.0 cannot be separated from the visionary and courageous leaders and practitioners. They are keenly aware of market trends, grasp policy opportunities, stand at the forefront of the tide, and dare to be the first. In October 2024, on the second anniversary of Hong Kong's new crypto policies, MetaEra launched the "Hong Kong Zone" and a series of interviews with prominent figures, engaging in high-level dialogues with government officials, experts, scholars, investors, and entrepreneurs who have made outstanding contributions and significant impact in promoting the development of Hong Kong's Web 3.0. This aims to convey their development concepts, policy suggestions, and construction directions to the public who are concerned about the development of Hong Kong's Web 3.0. Here we have also compiled some of the representatives' summaries and views on the development of Hong Kong's Web 3.0.
"In terms of virtual asset regulation, Hong Kong has implemented a strict licensing system to protect investors and increase market transparency. The government encourages asset management companies to invest in virtual assets, while strengthening risk management and compliance procedures to ensure the long-term healthy development of the market. In addition, the government is comprehensively promoting innovative financial services, supporting the development of virtual banks and online insurance, using big data and artificial intelligence to improve the diversity and quality of financial services, thereby attracting more international investment."
—— Ng Kit-chung, Hong Kong Legislative Council Member
"In this era of rapid technological development, Hong Kong's Web 3.0 ecosystem is facing unprecedented opportunities and challenges. As a global financial center, Hong Kong is at the forefront of the Web 3.0 revolution. I hope we can seize this historical opportunity, through innovation and cooperation, to build a more open and inclusive digital economic ecosystem."
—— Yiu Tak-kee, Hong Kong Legislative Council Member
"Over the next five years, Hong Kong's achievements in the Web 3.0 field will depend on the overall development trend of the industry. From a macro perspective, Hong Kong's position in Web 3.0 is expected to surpass its position in Web 2.0, and even surpass its position as a traditional financial center. Relying on its comprehensive advantages in talent, capital, information, and industrial chain resources, Hong Kong has shown stronger competitiveness than regions like Singapore and Dubai in key tracks such as Web 3.0 finance, DePIN, and RWA."
—— Kong Jianping, Member of the Hong Kong Web 3.0 Task Force, Director of Cyberport, and Founder of Nano Labs
"We are pleased to see Hong Kong's positive attitude towards the development of the Web 3.0 industry. As one of the world's leading financial centers, Hong Kong has the technical infrastructure and professional talent needed to become a global Web 3.0 hub. Hong Kong's investment in advancing the Web 3.0 regulatory framework, such as the HKMA's stablecoin project, demonstrates its balanced approach to innovation and compliance. We believe Hong Kong has tremendous potential to play a key role in shaping the future of Web 3.0 and the open metaverse, as well as driving digital property rights."
—— Yat Siu, Co-founder and Executive Chairman of Animoca Brands
"The main theme for Hong Kong in the next ten years is integration. We will actively build a more open, innovative and sound financial market under the principles of 'no regulation, no finance', 'long-termism', and 'licensing first'."
—— Weng Xiaoqi, Former CEO of HashKey Exchange
"Under the development trend of Web 3.0, Hong Kong dares to become the leader of the innovation wave. In the future, Hong Kong will develop into the core hub of the global Web 3.0 economic wave."
—— Du Jun, Executive Director and CEO of SINOHOPE
"As a gateway between the East and West, Hong Kong will further expand the potential of stablecoins in the Asian market, meeting the growing demand for cross-border trade and payments. Stablecoins can eliminate frictions in global transactions by synchronizing information and capital flows. RD Technologies is building a compliant and stable digital currency to provide speed and cost advantages for corporate cross-border transactions."
—— Liu Yu, CEO of Circle Technology
"As a global hub of finance and technology, Hong Kong has all the conditions to lead Web 3.0 innovation. I look forward to working with different stakeholders in the context of Hong Kong's Web 3.0 development to jointly promote the prosperity of the Web 3.0 ecosystem."
—— Caspar Wong, CEO of Web3Labs
With policy direction, ecosystem guarantee, financial innovation, and leading figures, the spark of Web 3.0 that was ignited in Hong Kong two years ago is now burning brighter and brighter, gradually becoming a raging fire. In the days and nights that have accompanied Hong Kong's growth, MetaEra has also reached a new historical starting point with an astonishing 10-fold business growth in 2024. As they say, whoever has the discourse power can become the rule maker. In the days to come, as a Web 3.0 information platform, MetaEra will help Hong Kong stand at the center of the Web 3.0 stage. In the spotlight, we are all the pioneers of the times.
