Government study: Hong Kong ought to adopt cryptocurrency like Singapore and Japan
In its attempts to develop and adopt Web3 technologies and crypto, Hong Kong, according to a government report by the Legislative Council of Hong Kong’s Research Office, should learn from nations like Singapore and Japan. The report stressed that Hong Kong might use the policy lessons learned from early adopters in the Web3 domain to advance its growth and raised worries that Hong Kong is falling behind its East Asian and Gulf rivals in Web3 development. In particular, it cited South Korea’s metaverse plan, Singapore’s emphasis on blockchain use cases, and Japan’s national Web3 strategy as worthwhile case studies.
To foster a climate favorable to Web3 technologies, the report recommended greater legal clarity, including resolving concerns about non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), and intellectual property rights. It also asked Hong Kong’s Legislative Council to keep up with advancements involving the metaverse in other nations and investigate the potential applications of metaverse-like solutions across different industries.
In its 2023–2024 budget, the government emphasized the need for Hong Kong to “seize the ‘golden opportunity’ of Web 3.0,” investing HK$50 million (US$6.4 million) in the city’s Web3 industry, according to the article. Additionally, it praised the Financial Secretary of Hong Kong for his recent promises to support the Web3 ecosystem and form a task group on virtual assets. Further evidence of the region’s effort to adopt Web3 and blockchain technology is the Hong Kong Securities and Futures Commission’s approval of licensing applications for cryptocurrency exchanges.
Hong Kong’s plan to become a center for virtual assets now that its new cryptocurrency regulations are in place appears to be more of an attempt to blend in than it did to stand out. This month’s regulations took effect, requiring Bitcoin exchanges that serve or advertise to Hong Kong residents to get a local license. A once-freewheeling sector is being pushed for regulation in the aftermath of tragedies like the collapse of FTX last year, and the city is not alone in this effort. According to experts, some of the city’s regulations are even more onerous than elsewhere. For security reasons, 98 percent of customer assets at Hong Kong exchanges must be maintained in so-called “cold wallets,” offline storage systems. According to Chengyi Ong, head of APAC policy at Chainalysis, a blockchain analytics company, the threshold for cold storage in Japan is 95% of the money.
Significant advancements in the Web3 and cryptocurrency sectors have occurred in Hong Kong, with Samsung’s Bitcoin Futures Active exchange-traded fund (ETF) debuting on the Hong Kong Stock Exchange earlier this year. However, Bobby Lee, a pioneer of the Bitcoin business in China, has cautioned that the city’s crypto-ambition may need to be revised, even though the government has undoubtedly moved in the right direction regarding cryptocurrencies. According to Lee, “The fantasy for exchanges is thinking that if officials let us get a license, then maybe they’ll start a sort of crypto-connect trading link with mainland China,” he said in an interview last month. In the bigger picture, he continued, “Hong Kong itself is a drop in the bucket.” He clarified that he is not condemning the Hong Kong administration.
