Article author: Echo, MetaEra
Source: MetaEra
Recently, MetaEra Hong Kong Zone was launched, and the "Hong Kong Crypto New Policy Two-Year Anniversary Celebration" series of activities was launched. An important part of it is "High-end Dialogue: Hong Kong Web 3 Influential Leaders". The person interviewed in this issue is Hong Kong Legislative Council member Wu Jiezhuang.
Character Introduction
Wu Jiezhuang is a member of the Legislative Council of Hong Kong and a member of the National Committee of the Chinese People's Political Consultative Conference. Hong Kong, as a special administrative region of the country, is becoming an important promoter of new quality productivity. Wu Jiezhuang believes that the development of Web 3 in Hong Kong is like the red chip stocks of the year. It is a new way of financing the high-quality assets of the country and Hong Kong on the international stage. In the past two years, the Hong Kong Special Administrative Region Government has actively developed virtual assets and Web 3 policies, which is an important measure to help the country promote new quality productivity under the "one country, two systems" principle.
Highlights
The most important reason why Hong Kong can become the center of Web 3 is that it relies on mainland China and follows the principle of "one country, two systems".
Hong Kong’s regulation of the Web 3 virtual asset industry can be described as “moderately proactive”.
In the digital economy, in addition to the "Internet +" model, two new concepts have been proposed: "artificial intelligence +" and "data element layer". In particular, the data element layer contains huge opportunities.
· As a risk-based international financial center, Hong Kong’s choice to regulate through the management of exchanges and the issuance of licenses is undoubtedly the most comprehensive and reliable approach.
The Hong Kong government’s attitude is clear: it is willing to innovate and be at the forefront.
Full interview
MetaEra: Since the Hong Kong Special Administrative Region issued the "Policy Declaration on the Development of Virtual Assets in Hong Kong" in 2022, it has taken the lead in developing the field of virtual trading and has successively issued virtual trading licenses. So why did it choose virtual trading as the first step in the development of Web 3? Some people will discuss the courage of the Hong Kong government to develop Web 3, while others say that taking too big a step will be risky. What do you think about this?
Ng Kit-Chuang: There is a specific historical background behind the Hong Kong government's policy declaration in 2022. The outbreak of the COVID-19 pandemic in 2020 prevented Hong Kong from opening up in a timely manner. By the end of 2021, we noticed that some virtual asset companies began to leave Hong Kong and move to other regions. We had in-depth discussions with the government on this and believed that if we wanted to firmly promote the development of the virtual asset industry, it was necessary to issue a declaration to show our determination to the world. Therefore, we chose to announce these policy contents at the important moment of Hong Kong Fintech Week that year.
The policy statement two years ago was just a node in the development of Hong Kong's virtual assets. In fact, Hong Kong's development in the field of virtual assets is far earlier than 2022. Since 2016 and 2017, Hong Kong has become a vibrant Web 3 center, attracting many international entrepreneurs to launch their virtual asset projects, exchanges and public chains here. Hong Kong's virtual asset exchange "sandbox" mechanism was established as early as 2018 and 2019. Many companies joined the sandbox program in 2019, including two of the three licensed companies we know today, which entered the "sandbox" during that period. Subsequently, after a period of development, Hong Kong's financial management and regulatory agencies developed a down-to-earth "risk-based" management approach through close connection with the industry. Finally, at the end of 2022, the Hong Kong Legislative Council passed the relevant ordinance and officially announced the "Policy Declaration on the Development of Virtual Assets in Hong Kong". This is the history of this declaration.
You just asked why you chose a virtual asset exchange as the first step in your development. As we all know, in the field of virtual assets, exchanges play a vital role, and all investors and institutions need to trade and invest through exchanges. Therefore, as an international financial center with a "risk-based" management approach, Hong Kong chooses to regulate by managing exchanges and issuing licenses, which is undoubtedly the most comprehensive and reliable approach. Hong Kong has rich experience in managing many different types of products, especially in the trading of securities and other financial products. Although virtual asset trading is similar to these, how to adopt the same risk and regulatory approach while taking into account the risks of investors and the development of the market and industry is a challenge facing Hong Kong in this area. I believe that this step taken by Hong Kong is a well-thought-out and long-term decision.
MetaEra: Will the epidemic also have some impact on the development progress of Web 3 in Hong Kong?
Wu Jiezhuang: The epidemic has indeed had a certain impact on the development of Web 3 in Hong Kong. Travel restrictions during the epidemic have made many companies more cautious when choosing their work locations. But as Hong Kong gradually relaxes restrictions, we have observed that some companies that originally moved to other places have begun to return. The policy declaration issued by the Hong Kong government not only shows the world Hong Kong’s firm determination to develop Web 3, but also provides confidence for these companies. For example, on January 9, 2023, Hong Kong held a large event, which attracted about 500 participants on the first day of the opening. The release of the declaration and the reopening of the border have boosted Hong Kong’s vitality.
MetaEra: You have sought development opinions from the industry to promote Hong Kong to become a global Web 3 center. The major theme of Web 3 includes asset trading, OTC, stablecoins, RWA and other key parts. When it comes to high-volatility assets, there must be regulatory policies to cooperate. In which aspects of Hong Kong's current regulatory policies are more relaxed and which aspects are more stringent?
Wu Jiezhuang: Hong Kong’s regulation of the Web 3 virtual asset industry can be described as “moderately proactive”. This kind of regulation is neither too lenient nor extremely strict.
From a "strict" perspective, we are very strict in protecting small investors. For example, our virtual asset exchange regulation is different from that of other countries and regions, requiring exchanges to separate their own assets from customer assets, and customer assets must be 100% covered by insurance. This approach is based on the lessons learned in the past few years, when we heard a lot of news about exchanges going bankrupt or being hacked, and the ultimate victims were investors, and these incidents affected market confidence. Hong Kong's current and future regulatory framework is designed to prevent such incidents from happening and ensure that investors' interests are protected; at the same time, we are also very strict with exchanges. The Hong Kong government has gradually clarified a series of regulations for virtual assets, first targeting virtual asset exchanges, then stablecoins and OTC. In the recent government work report, the Chief Executive also mentioned the importance of virtual asset custody, and I am also actively promoting DAO laws and regulations.
From a "relaxed" perspective, Hong Kong's regulatory environment is considered relatively relaxed, partly due to its unique status of "one country, two systems". Within this institutional framework, Hong Kong implements a capitalist system, which provides fertile soil for financial innovation. Hong Kong adheres to the common law, and as long as it does not conflict with existing laws, anything that is not explicitly prohibited by law can be tried and innovated. Including the previously mentioned stablecoins and over-the-counter (OTC) transactions. At present, there are no written laws in these areas, and relevant legislation is expected to be introduced next year. Under the current legal framework, OTC trading hawkers on the streets of Hong Kong can still conduct business without clear legal constraints. This regulatory gap provides them with the opportunity to continue their operations and also facilitates innovation. Businesses and merchants are able to explore better business models and continue to develop on this basis.
So I think the most important reason why Hong Kong can become the center of Web 3 is that it relies on mainland China and follows the principle of "one country, two systems". The advantage of this system is that Hong Kong can make use of a large number of technical talents, especially Shenzhen, which is adjacent to the Guangdong-Hong Kong-Macao Greater Bay Area. There are many young and capable engineers there. Their innovative spirit and practical ability are Hong Kong's unique advantages. In addition, Hong Kong is a traditional financial center. Not only is the stock market active, but it also has a large number of global banks' Asia-Pacific headquarters or global headquarters, and its asset management scale ranks among the top in the world. This provides a solid foundation for the parts of Web 3 with strong financial attributes, such as virtual asset trading. Coupled with Hong Kong’s pragmatic and innovative practices in the field of Web 3, I am confident that Hong Kong can become the global Web 3 center in the future.
MetaEra: Regarding Trump's plan to include Bitcoin in the strategic budget reserve mentioned at the Bitcoin Conference, you have expressed the same view on social media. So what do you think is the importance of including Bitcoin in the strategic budget reserve? What is the possibility of this being actually implemented?
Wu Jiezhuang: Bitcoin is a relatively successful application case of blockchain technology. It has been fifteen or sixteen years since Satoshi Nakamoto proposed it about ten years ago. Although Bitcoin was attacked and slandered in the early days because it was used for illegal transactions such as money laundering, purchasing drugs and arms, its attention in the traditional financial field has increased significantly today. Some traditional families and companies have begun to include Bitcoin and other virtual assets they believe to be valuable in their asset allocation.
President Trump's point of view has triggered my thinking, and I think the Hong Kong government should also study whether this area is feasible. I am not advocating that this option must be adopted or completely excluded, but I suggest that it should be studied. After all, this topic has received widespread attention, and research is a wise approach. As an asset, Bitcoin has become an allocation option for many people, but its price volatility is large, and its stability and monetary properties are also questionable. Therefore, we can regard it as an electronic digital asset, similar to gold or other precious metals, which has certain comparability, but is not a real currency. Whether it is a country, a company, a family or an individual, it is understandable to consider Bitcoin as part of the asset allocation. Therefore, it is reasonable for the country to consider this issue. This is also why I posted on social media to share this idea.
In addition, most of the participants in virtual assets are young people, especially those born in the 2000s and 1990s. Those born in the 1980s are already veterans in this field. As a person who has been engaged in technology and entrepreneurship for a long time, I pay close attention to the interests and hobbies of young people, because these are often the direction of future development. In particular, the surge in virtual asset trading volume is largely driven by the participation of young people. According to US data, about 50 million citizens hold digital assets, most of whom are young people.
As for the idea behind President Trump, although I have heard that he does not agree with Bitcoin, he seems to have accepted it now. This may be related to the election, but I don't want to speculate too much about the intention behind it. However, when politicians raise such opinions, it means that different places and countries need to consider this issue, and this is exactly my idea.
MetaEra: We all know that the Hong Kong Ethereum spot ETF was approved earlier than the United States, but judging from the actual data performance, it is difficult to compare it with traditional asset transactions. So what kind of impetus will the approval of the Hong Kong Ethereum spot ETF bring to the development of Hong Kong's Web 3?
Wu Jiezhuang: I always hope that the Hong Kong government can play the role of a leader, not just a follower. Traditionally, Hong Kong is accustomed to following the pace of the United States and other developed countries, watching their practices, and moving forward after confirming that they are ok. But in the Web 3 era, I hope that Hong Kong can become a leader and lead innovation. This innovative leading spirit is reflected in two aspects: one is the Ethereum ETF, and the other is asset swaps. In the United States, ETF shares must be traded in fiat currency, while Hong Kong allows the use of virtual currencies, such as Ethereum and Bitcoin, to exchange shares. These two innovations are crucial. The most critical thing is the attitude of trying. The attitude of the Hong Kong government is clear, willing to innovate and willing to be at the forefront.
Although our trading volume may not be comparable to that of the United States at present, it will take some time for ordinary citizens in Hong Kong to accept this new type of asset. Hong Kong has experienced many financial crises and is often cautious about the innovation of financial products. Citizens are more cautious because they have experienced many stock market crashes and investment product explosions. Therefore, the initial trading volume will not be too large, and the participation of institutions will be relatively small. We strive to optimize laws and regulations, build a market ecosystem, and attract more talents and funds to Hong Kong, hoping to increase trading volume.
In addition to ETFs, I have noticed that some online brokers have begun to provide services for buying and selling four types of virtual assets directly with legal tender, through licensed exchanges in the background. These trading volumes are also considerable, sometimes reaching billions a day, which is not a small number. Therefore, I believe that Hong Kong's attitude towards supporting the development of the industry is clear. Our growth needs time to cultivate, including investor education and gradual relaxation of policies to attract more different capital to come to Hong Kong to participate in investment and trading.
MetaEra: At the current stage, does the development of Web 3 in Hong Kong focus on financial attributes, or on technological innovation, talent cultivation, project incubation, etc.? Is there a particular focus?
Wu Jiezhuang: From the government's perspective, since the responsible department is the Financial Services Bureau (FSTB), the Hong Kong government's attitude actually focuses more on financial attributes.
To me, Web 3 is not just a financial platform, it includes many important areas. Virtual asset trading is the core part of it, and there are many other technological applications, such as artificial intelligence, data processing, and data display through methods such as the metaverse. These are actually important components of Web 3. I proposed in the Legislative Council to set up a committee called the "Web3 and Virtual Asset Development Subcommittee". The subcommittee actually involves the participation of two policy bureaus, in addition to the Financial Services and the Treasury Bureau, there is also the Innovation, Technology and Industry Bureau. The Innovation, Technology and Industry Bureau plays an important role in it, which involves talent training, enterprise project innovation and other aspects. After the public chain and the exchange, there are more application scenarios that need to be realized through different technology projects and innovation projects. These innovative projects rely on young people, engineers, and creative builders to create together. Without them, there would be no objects for trading, and no public chain to apply and operate. Ultimately, everything comes down to the projects. They are the blood flowing through the exchange, and each part is crucial. In summary, I think Hong Kong should develop Web 3 in an all-round way.
MetaEra: As a member of the Legislative Council of Hong Kong, you will pay attention to the development of all aspects of Hong Kong. Hong Kong is very developed in finance, real estate, import and export trade, etc., so are the young people of today still suitable for achieving enough results in these areas? You have vigorously promoted the implementation of the Hong Kong government's policies in the Web 3 race. Do you think Web 3 can become a new opportunity for Hong Kong youth to find employment or even start a business?
Wu Jiezhuang: When I ran for the Legislative Council at the end of 2021, one of the core concepts in my manifesto was to create industries and provide more opportunities so that young people in Hong Kong can have room for upward mobility. The reason for this advocacy is that since Hong Kong's return to China, local prices have continued to be high, and industry development has focused on finance and real estate. Although these fields are mature, they limit the choices of young people entering society. It is very difficult to stand out in these traditional industries.
Therefore, during my campaign, I hope to use Web 3 to create more diverse opportunities for young people in Hong Kong. Because I am relatively familiar with this industry and think it is very suitable for young people in Hong Kong. As I just said, this is not just a problem of one industry. I am also creating conditions in other industries suitable for young people such as technology, culture, and sports so that they can seize opportunities.
In the past decade, I have been committed to youth work. I served as the chairman of the Hong Kong Youth Association and promoted Hong Kong youth to go to the mainland for exchanges, internships and entrepreneurship. I have done a lot of work in this regard. I have observed that young people in Hong Kong have a broad international vision and flexibility. Web 3 and other new industries are undoubtedly a huge opportunity for them and are also crucial to the long-term development of Hong Kong. Therefore, I am also working hard to promote this agenda in the Legislative Council.
MetaEra: I would like to know how big the current job market is for Web 3 in Hong Kong? What majors do you think are more suitable for students in the Web 3 field? In addition, from your observation, how accepting is Web 3 among young people in Hong Kong?
Wu Jiezhuang: Since 2022, when Hong Kong relaxed its customs clearance policy, coupled with the clear policy support and vigorous promotion of the Hong Kong government, we have witnessed foreign companies, including overseas and mainland companies, coming to Hong Kong to start businesses and apply for licenses. Preliminary data shows that more than 500 companies have already settled in Hong Kong, and the actual number may be far more than this, even reaching 1,000. These companies vary in size, some employing about 200 employees in Hong Kong, while others are smaller, with about a dozen to twenty employees. Overall, these companies provide nearly 1,000 to 10,000 jobs for the Hong Kong market. Of course, these jobs are not limited to local young people, but also include talents attracted through our talent policies such as the "High Talent Link" and "Quality Talent" programs, who come to Hong Kong to start businesses and work. I estimate that the number of these new jobs is close to 10,000, which is the answer to the market size question.
As for the types of young people who are suitable for working in the Web 3 industry, I think it is all aspects. Web 3 is not just a technical field, it covers programming, development, financial products, community activities, Marketing and many other aspects. For example, financial products require an understanding of financial logic, the organization of communities and activities requires marketing capabilities, and the metaverse and three-dimensional design require art and graphic design skills. The chain of the entire industry is very broad, and different positions require young people with different attributes. As long as you are interested in this industry and willing to join, no matter what your academic background is, you can easily find a position that suits you.
MetaEra: Previously in the Mainland, in order to promote the development of blockchain technology, concepts such as "coinless blockchain" and "chain reform" have emerged. Can the development of virtual asset transactions in Hong Kong at this stage become a template and paradigm for the development of Web 3 in the Mainland in the future?
Wu Jiezhuang: Since 2017, mainland China has imposed restrictions on virtual asset transactions, while Hong Kong has maintained an open attitude. Against this backdrop, the mainland and Hong Kong may achieve complementary advantages in this area: the mainland is rich in application scenario resources, while Hong Kong excels in talent and market space. This complementarity provides the possibility for cooperation between the two places in asset transactions and financial operations. Hong Kong's "one country, two systems" framework makes it an ideal place to test new financial models, which may be expanded to a wider range of areas in the future.
Historically, the Hong Kong stock market has also gone through a process from disorder to regulation, and eventually developed into a key platform for corporate financing. At present, many small exchanges in the Web 3 field may also go through a similar integration process, and eventually form a few or a single large exchange. This is the natural trend of industry development.
The development of the mainland's securities market has benefited from Hong Kong's mature experience. For example, Laura Cha from Hong Kong brought her rich experience in Hong Kong to the China Securities Regulatory Commission, which promoted the maturity of the mainland's interest rate market. This cross-regional exchange highlights the advantages of "one country, two systems".
We will continue to leverage the advantages of "one country, two systems" to steadily advance development. Given China's scale advantage and unique path to modernization, we must move forward steadily and ensure that every step is solid and reliable in order to achieve sustained and stable development.
MetaEra: From your personal perspective, can Web 3 help Hong Kong become the next generation of Asian financial capital? After all, cities such as Dubai, Singapore and Tokyo are developing Web 3 in a competitive manner. What advantages do you think Hong Kong has?
Wu Jiezhuang: I firmly believe that Hong Kong has the potential to become the financial capital of Asia. As a representative of Asia in the financial center of New Zealand and Hong Kong, Hong Kong has its unique advantages. As I have mentioned many times before, Hong Kong has the policy advantage of "one country, two systems". With the strong backing of the country, Hong Kong has great support in terms of market, capital and talents.
Hong Kong has a sound legal system, low tax rates and is simple and clear. More importantly, Hong Kong's foreign exchange market is free-flowing and has no restrictions. This has not changed since the handover. Funds can come and go freely, and foreign capital can withdraw without obstacles after making profits. This is a firm promise to international investors and an important factor in attracting them. In addition, Hong Kong's legal environment is also very good. So I firmly believe that with these objective conditions, Hong Kong is fully capable of developing into a financial center with greater depth and breadth.
MetaEra: In addition to being a member of the Legislative Council of Hong Kong, you are also a member of the National Committee of the Chinese People's Political Consultative Conference. Since we are now promoting the concept of "digital economy", what do you think of China's development in the digital economy, and what are your wishes for the future?
Wu Jiezhuang: The digital economy is an extremely broad platform and occupies an important position in the country's "14th Five-Year Plan". As the final year of the plan approaches, the core technologies of the digital economy are expected to account for 10% of China's GDP, which is a very large number involving hundreds of trillions of RMB. In the scope of the digital economy, we have not only seen the "Internet +" model discussed ten years ago, but now we have proposed two new concepts: "artificial intelligence +" and "data element layer". Especially the data element layer, I think it contains huge opportunities. The authorization, transaction and utilization of data will greatly enhance the productivity and GDP of all industries in the future under the huge economic scale of our country, which in turn provides all industries with an excellent opportunity to enhance digital development. The key lies in how to effectively utilize the data resources we have today. These data have always existed around us, but have not been well collected and utilized before. Today, we have such technology and methods to apply data to all walks of life. I believe that with the establishment of the National Big Data Bureau, this will promote the entire country to take an important step in digital development.
