At the beginning of this year, the Hong Kong government officially proposed to promote the development of the Hong Kong Web 3.0 industry and establish Hong Kong as an international hub for virtual assets in the "Budget Address". In April 2023, the Hong Kong Web 3.0 Association was officially established, coinciding with the Hong Kong Web3 Carnival and Digital Economy Summit. The four-day carnival is a grand event that brings together global Web3 technology leaders, experts, scholars, and industry elites, with over 10,000 registrations. The Hong Kong Special Administrative Region (HKSAR) government is making every effort to transform Hong Kong into a global leader in digital assets and digital finance, striving to become the world's center for Web 3.0.
From a global perspective on the development and regulatory policies of Web 3.0, Hong Kong has favorable conditions for the development of Web 3.0. However, promoting the development of Web 3.0 is not something that can be easily achieved in the short term. In terms of the development and transfer trends of blockchain and Web 3.0, the focus has shifted from east to west and then from west to intermediate areas such as Hong Kong and Singapore.
The continuous interest rate hikes by the Federal Reserve have dealt a blow to the cryptocurrency and technology sectors, resulting in the collapse of many cryptocurrency ecosystems and a drastic decline in the valuation of technology companies. With the bankruptcy of some large cryptocurrency institutions and crises in institutions like Silicon Valley Bank, regulatory authorities in the United States have increased their supervision of the cryptocurrency market. Paxos, the issuer of the stablecoin BUSD, was sued by the SEC, and the New York State Department of Financial Services (NYDFS) has requested them to cease minting BUSD. Binance, the world's largest cryptocurrency exchange, and its founder Zhao Changpeng are being investigated by the U.S. Commodity Futures Trading Commission (CFTC). Even Coinbase, a compliant domestic cryptocurrency exchange in the United States, has been affected. Taking advantage of this opportunity, the virtual asset center seems to have the chance to shift to Hong Kong.
In terms of regulatory policies, Hong Kong is further enhancing compliance and transparency. The "Guideline on Supervision of Virtual Asset Trading Platforms" will be officially implemented on June 1, 2023, and virtual asset trading platform operators can apply for licenses. Licensed virtual asset trading platforms will be able to provide services to retail investors, and platforms are expected to be granted licenses as early as the second half of this year.
The Securities and Futures Commission (SFC) of the HKSAR, in the formulation of policies, not only designs the obligations that virtual currency trading platform operators should fulfill under the framework of the "Anti-Money Laundering Guideline", but also takes into full consideration the protection of the interests of retail investors and the promotion of the long-term stable development of the financial market, providing active policy support and protection for all investors. This will promote the development of the digital economy and increase Hong Kong's competitiveness as a center for Web 3.0.
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