I believe Hong Kong has the potential to become a global Web3 center. Hong Kong has abundant financial resources, especially the strong interest of the younger generation of family offices in digital assets. Hong Kong's unique financial background provides advantages for supporting blockchain projects. Hong Kong's rapid development in this field is remarkable, and maintaining growth advantages will be key.
Article author: Sunova Taichu
Source: MetaEra
Recently, MetaEra Hong Kong Zone was launched, and the "Hong Kong Crypto New Policy 2nd Anniversary Celebration" series of activities, one of which is the "High-level Dialogue: Hong Kong Web3.0 Influential Leaders". The person interviewed in this issue is Yat Siu, co-founder and executive chairman of Animoca Brands. This article is translated and edited based on the English interview content.
Introduction
Yat Siu, Co-founder and Executive Chairman of Animoca Brands, is a leading figure in the blockchain and gaming industry. He serves on the Hong Kong Government's Web3.0 Development Advisory Committee and is actively involved in promoting the application of digital property rights and decentralized technologies. Yat has extensive technical and entrepreneurial experience, having co-founded several successful startups before founding Animoca Brands. He is considered a thought leader in integrating non-fungible tokens (NFTs) into mainstream gaming and advocates for the transformative potential of blockchain technology in creating a fairer digital economy.
Highlights
●Blockchain gives true ownership of digital assets, and Hong Kong can play a huge role in this area with its market economy framework.
●The success of the shared network will benefit the entire Web3 ecosystem, and Hong Kong can promote ecological prosperity by reinvesting in innovation.
● NFT is not only a market, but also a symbol of identity and culture, and a future tool for protecting the rights of creators.
●Stablecoins are the bridge between Web2 and Web3, converting traditional assets into Web3 assets and promoting mass adoption.
●Hong Kong has huge potential and will nurture a new generation of innovative projects in the Web3 field.
●Hong Kong’s Web3 investment ecosystem is growing rapidly. Although not as large as that of the United States and the Middle East, it has huge development potential.
●Animoca Brands operates in accordance with local regulations, but because it does not handle customer assets, the compliance burden is much lower than that of the exchanges.
●Hong Kong has the potential to become a global Web3 hub, but further forward-looking actions are needed to remain competitive.
●Hong Kong has huge potential and can achieve rapid development in the Web3 field by attracting talents.
●The open metaverse is developing steadily. Telegram and TON ecosystem and high-quality Web3 games will become important game changers.
● Web3 allows users to improve their financial literacy and gain a deeper understanding of the value of capital, assets, and digital property rights.
Full Interview
MetaEra : Animoca Brands is at the forefront of protecting digital property rights. Could you please tell us more about the implementation process of this technology and the tangible benefits it brings to content creators and rights holders? As a company rooted in Hong Kong, in what areas do you think Hong Kong can improve or progress to further enhance support for digital property rights?
Yat Siu : We use blockchain to create digital property rights because blockchain, like the technology used by Bitcoin, enables true digital ownership. Take Bitcoin, for example, if it is in your wallet, you truly own it; it cannot be taken away. Blockchain technology enables this by recording ownership on a secure ledger. This technology can be extended from value storage assets, such as Bitcoin, to NFTs (non-fungible tokens), which are unique digital identifiers used to identify digital assets such as artwork or gaming items. NFTs represent the true provenance of digital items, similar to real-world items.
In the digital world, proving ownership outside of a specific ecosystem is nearly impossible. For example, if you want to sell an in-game item to someone outside of the ecosystem, there is no reliable way to record or transfer ownership. In real life, you can sell a car with legal documents verifying the transaction, but there is no such guarantee for digital items. Blockchain changes this and makes verifiable digital ownership possible, allowing these assets to be converted into capital.
Once an item is considered a capital asset, it can increase in value and you have certainty about its ownership, which makes it a viable option for investment. Certainty of ownership is critical - if you don't have ownership, there's no incentive to invest. For example, in Web2, platforms like Instagram let you build a reputation, but you don't really own it; the value accrues to the platform. This is similar to landlords and restaurant owners - after running a restaurant for many years, the location holds most of the value, not the business itself. Web3, however, enables you to own your own digital assets.
Digital property rights open the door to new business opportunities, enabling people to build services on assets they own, just as real-world ownership allows for new layers of services like car leasing or customization. Another aspect of ownership is its cultural value, reflecting identity. Many of the items we buy reflect who we are, such as fashion or cars. Owning a specific brand or item (like a Tesla or Lamborghini) conveys certain qualities without requiring explanation. In the digital realm, gaming items and skins carry similar meanings, but currently we don’t actually own them; we rent them. We see huge potential for a trillion-dollar market built on digital ownership.
As for Hong Kong, it is ideally positioned in this digital ownership revolution due to its market economy framework. Capital relies on property rights, and Hong Kong is one of the most capital-friendly cities in the world, which understands the value of property rights and capital. Hong Kong is also a financial center, similar to New York, Dubai or Singapore, which are leading the way in Web3 and blockchain development. Hong Kong's financial expertise and support for industry innovation make it a natural leader in this space.
Faced with recent challenges such as competition from Singapore, Hong Kong has an opportunity to define its role as a future financial hub by embracing Web3 and blockchain.”
MetaEra: It’s so refreshing to hear about Animoca Brands’ leadership in protecting digital rights! This technology and innovation is truly a game changer. Since we’re on the subject of technology applications, let’s get into the Web3 economy. What do you think is the hardest part of building a strong Web3 economic model?
Yat Siu : Animoca Brands contributes to the ecosystem by building, investing and collaborating in the Web3 space. Although we are not a traditional fund, we are one of the largest investors in Web3 with over 540 investment cases. This makes us one of the largest investors in Web3 overall. Through investment, we support and nurture entrepreneurs and builders, enhancing the resilience of the Web3 ecosystem.
The ethos of Web3 and blockchain centers on decentralization, which we interpret as widely distributed common ownership. A well-distributed and decentralized ecosystem promotes fairer competition and a more just market, leveling the playing field. In contrast, monopolies often use their control to dominate the market. Decentralization counters this by redistributing power, creating a fairer and freer market.
We support this vision of a "shared web," meaning that by helping Web3 projects grow, the entire ecosystem benefits. For example, if Bitcoin reaches $100,000, the entire Web3 space will benefit, not just Bitcoin holders, which will lead to increased network value, transactions, and liquidity flows. Unlike Web2, where the success of a company like Facebook or Google primarily benefits themselves, Web3 success is more widely shared, with value permeating throughout the ecosystem.
Investing in Web3 is essential for this growth. Imagine if every company in Hong Kong invested 5%-10% of its profits in local startups, the startup ecosystem would flourish, similar to the model in Silicon Valley. In Silicon Valley, although the infrastructure is sometimes not as good as in Hong Kong, innovation still thrives due to the high concentration of angel investors. It's not just large funds here, individual engineers and employees also tend to invest in multiple projects. This culture where anyone can be an investor is what drives innovation.
In contrast, in Hong Kong and most parts of the world, this investment culture is less common. People may be more willing to invest in real estate or stocks rather than startups. However, in Web3, most companies and individuals who gain profits usually reinvest in other projects, forming a booster effect and helping the ecosystem grow.
There is no silver bullet when it comes to building in Web3, but a core concept is that tokens provide access to network effects. Tokens are network assets, like Bitcoin, that have both financial and application utility, creating a very different dynamic than traditional assets. For example, holding Facebook shares does not affect your use of Instagram, and the number of followers on Instagram does not affect your equity in Facebook - they are completely separate. But in Web3, they are unified: holding a token makes you a stakeholder in the network.
Owning a token means you have a stake in the network, not just as a store of value. This network asset is a unique type of asset, akin to owning a stake in the network effect itself. The value of a network economy (like a token economy) grows through its users and utility, just like a traditional economy. Building in Web3 is fundamentally about building a network economy, and understanding how to optimize this is very different than building a typical business model. Many people entering Web3 for the first time may not realize that they are creating a network economy, which is more like forming a nation than just running a business.
MetaEra: Building a great user experience and community is a very important part! In addition, NFTs also play a core role in this process. Can you tell us about the role of NFTs in the Animoca Brands ecosystem? What do you think about new uses of NFTs in the future?
Yat Siu : NFT as a technology can be seen as a fundamental shift, just like MP3 changed music. NFT stands for "non-fungible token", which may not be the most attractive way to explain digital ownership. In the future, I don't believe we will still call it NFT, we may just say "digital ownership". That's why we use the term "digital property rights". We believe that this concept will eventually become important. However, now we need to explain the technology, which is why terms like NFT are still widely used, even if many people don't fully understand them.
In general, we think of NFTs as a store of digital culture. They represent a value beyond money; they are not a currency or a store of value, but a store of culture. Within this store of culture, there are different types of capital. Financial capital is the obvious, but there are other forms, such as symbolic capital (e.g. a college degree), cultural capital (arts and literacy), and social capital (networks and friendships). For us, NFTs capture cultural, social, and symbolic capital. While meme coins may also represent some of these elements, NFTs carry more weight in terms of symbolism and culture. NFTs can be compared to Birkin bags, Picassos, Lamborghinis, Rolexes, and even Nike shoes, which are all objects that symbolize social identity and personal taste.
Because NFTs are unique, they have multiple applications in digital ownership, such as art or gaming items. They can also be used for intellectual property (IP), protecting music, dance or educational rights in the form of NFTs. This allows creators to embed legal protection for less than a dollar, which is revolutionary. I see a future where NFTs serve as a tool to protect, enhance and evolve intellectual property. Instead of a handful of rare NFTs, I envision billions of NFTs representing assets from property deeds to creative works that can then be traded, bought, sold and shared.
NFTs are currently a $10 billion industry. Although down from their peak in 2021, this is still a significant increase from almost zero five or six years ago. NFTs have really changed the game in terms of digital rights and transactions, especially on branded items like NFT Nike shoes, which give unique symbolic value.
MetaEra: Animoca Brands has recently received a large amount of financing. What is the company's future capital operation strategy? Which businesses or regions will be prioritized for expansion next?
Yat Siu : Animoca Brands is indeed active in fundraising, especially in regions such as Saudi Arabia and the Middle East, which, along with Asia Pacific, are growth markets. These regions are open and friendly to Web3, making them ideal places for us to expand. In addition to gaming and Web3, we are also focusing on two main areas: digital identity and education.
We are building reputation in Web3. Reputation is essential to building trust because it enables people to do business securely, even without revealing personal information. After all, the blockchain does not show who the other party is; we can only see the wallet address. However, to build stronger networks, it is essential to know the reputation of the other party. Imagine repeatedly doing business with a stranger in Hong Kong, but not being able to build any rapport. This is not sustainable. With Mocaverse, we are creating a digital identity system that allows for reputation scoring so that new business contacts can be trusted even if you meet for the first time. This will increase trust, an important factor in our industry.
The second area of focus is education, specifically addressing the student loan crisis. In the United States, the size of this problem is $2.2 trillion. We aim to leverage Web3 to provide better student financing solutions that may help reduce costs and increase benefits. These initiatives in digital identity and education will support broader growth in gaming, decentralized finance (DeFi), and the entire Web3 ecosystem.
MetaEra : Animoca Brands is currently actively involved in the stablecoin initiative in Hong Kong. How do you view the role of stablecoins in the blockchain ecosystem? What plans or views does Animoca Brands have in integrating stablecoins into its broader digital economy strategy?
Yat Siu: We are focusing on stablecoins because Hong Kong currently lacks a stablecoin framework. In partnership with Standard Chartered and HKT, we are committed to creating a local stablecoin in Hong Kong to support the local ecosystem and enhance confidence. We believe that stablecoins play a bridging role between Web2 and Web3, making it easier for users to convert assets into Web3 assets, as shown by stablecoins such as Tether and Circle. This initiative is in line with Animoca Brands' direction to become an institutional-grade Web3 player, a role that is still lacking in the industry and needs further development.
The importance of stablecoins lies in their ability to guide users from Web2 to Web3 on a large scale. Stablecoins enable users to keep assets in familiar currency forms in Web3 and provide an easy way to transfer value. If someone creates value in Web3, converting it to stablecoins is faster and safer than going through exchanges, and provides flexibility for further transactions or storage.
Our strategy for stablecoins is also consistent with the concept of mass adoption, simplifying asset management through blockchain technology and making it more convenient.
MetaEra: Recently, there are reports that Animoca Brands is considering listing in Hong Kong. Given the overall weakening of Hong Kong's capital market, how do you view the impact of Hong Kong's new policies on the company's listing decision? What specific advantages do these policies bring to the company in terms of market expansion?
Yat Siu: As for a potential IPO, as a company headquartered in Hong Kong, there are clear advantages here. Despite the weak capital markets, Hong Kong is still one of the largest markets in the world. Considering that we are headquartered here, choosing Hong Kong is a reasonable decision. Although an IPO will take time, Hong Kong is likely to become an important market for us when we are ready. Hong Kong is developing better crypto policies and clearer regulations, which provides good opportunities for our future listings.
MetaEra : Animoca Brands has invested in over 500 projects. What specific areas will you focus on next? Do you think Hong Kong has the potential to foster a new wave of innovative projects? What do you think about the current sentiment in the Web3 venture capital community, especially the discussion about hesitancy in investing in projects led by Chinese founders?
Yat Siu : We are seeing rapid growth in Web3 development, with many Chinese founders leading the way. The Web3 model emphasizes property rights and asset frameworks, which is highly consistent with Chinese business thinking, especially among people in Hong Kong and Greater China.
While many founders choose to operate outside of mainland China, they have a deep understanding of the model and have established companies in places like Hong Kong and Singapore. In addition, many well-known overseas Web3 companies are run by ethnic Chinese or Chinese. This is in stark contrast to Web2, where there are relatively few Chinese founders with a strong international presence. However, in Web3, the global influence of Chinese founders is significant. The world's largest exchanges, such as Binance, OKX, HTX, and Bitget, are mainly founded by Chinese founders, with the exception of Coinbase. This reflects an important trend: Web3 has attracted a large number of Chinese entrepreneurs, which is very noticeable. The capitalist principles of Web3 seem to complement many people's intuitive understanding of it.
The size and distribution of the investment community in the Web3 space in Hong Kong is much greater than that of Web2, which means that Web3 startups here receive significantly more funding. This funding advantage has allowed Web3 companies in Hong Kong to grow faster and larger than Web2 companies. In addition, many successful Web3 entrepreneurs will reinvest their earnings into new projects, creating a natural reinvestment cycle within the community.
Although Hong Kong's Web3 investment environment has not yet reached the scale of the United States or the Middle East, it has considerable potential. Hong Kong has abundant wealth, and the younger generation of family offices have shown a strong interest in digital assets, Web3, and blockchain. As a global financial center, Hong Kong has a deep understanding of the financial system, which complements the principles of Web3 and blockchain.
While Hong Kong has traditionally focused more on public markets than private equity, blockchain and tokenization offer a rapidly evolving public market alternative. This familiarity with liquid markets gives Hong Kong a unique advantage in supporting blockchain projects.
MetaEra : Animoca Brands’ broad investment strategy is really impressive! As global interest in blockchain continues to grow, we are also seeing increasing regulatory attention. How does Animoca Brands handle compliance issues in different regions? How does Hong Kong’s approach differ from other markets? In addition, how do you work with other companies or government agencies to promote the development of Web3 and the Metaverse?
Yat Siu : Regarding regulation, the global framework is still evolving. Although no clear model has yet been formed, Hong Kong is making progress along with places like Dubai, Singapore, Tokyo and Liechtenstein. Most regulatory efforts are focused on fungible tokens, focusing on liquid assets, while NFTs are generally viewed as consumer assets rather than financial instruments and are therefore largely unregulated.
In certain markets, we need to assess whether we will operate locally, which of course requires compliance with local regulations. We have dedicated compliance and legal teams to manage this. However, generally speaking, areas like Web3, gaming, NFT, education, and digital identity are not subject to strict regulatory requirements. Regulators have made it clear that these industries are beyond the current regulatory framework, which means that we face a much lighter regulatory burden than exchanges.
Unlike exchanges, we do not handle client assets or manage asset segregation. Our investments are made using our own balance sheet and any asset management is backed by our own funds. This is very different from exchanges, which must comply with strict third-party asset custody and management regulations. Therefore, although we comply with local laws in our business areas, our regulatory obligations are not as extensive as those of exchanges.
MetaEra : Animoca Brands’ commitment to compliance really reflects its focus on sustainable and long-term growth! How do you view Hong Kong’s evolving role in the global cryptocurrency space? Hong Kong’s luster may have faded in the Web 2.0 era, but do you think it has the potential to regain its status as the “Pearl of the Orient” with the rise of Web 3.0? Is it possible that Hong Kong’s new crypto policy will become a benchmark for global regulation?
Yat Siu : Hong Kong aims to become a global Web3 hub, although there is still a lot of work to do. To achieve this goal, Hong Kong needs to take a more forward-looking approach than other regions. The city has a rich talent pool in this field, which makes it easier for people here to understand the value of the token economy - something that may be more challenging for outsiders. I believe Hong Kong has great potential,
Web3 is still in its early stages, and it’s impressive when we look at the companies that have launched or are building here. Many of the companies have grown significantly in size, which is particularly striking - especially considering that Hong Kong was not a major tech hub before Web3. Now, Hong Kong does have a real momentum. However, Hong Kong needs to maintain its growth advantage to remain competitive. Although not the biggest platform yet - the likes of Dubai and to some extent Singapore are still in the lead - Hong Kong is progressing very quickly. Attracting more talent will be key to its continued growth.
MetaEra : As an industry leader, how do you see the development of blockchain and metaverse technology on the global stage? What emerging technologies do you think may have the potential to change the rules of the game in the near future?
Yat Siu : The Metaverse is still developing, especially in the Web3 space. Many people are skeptical that Facebook's Metaverse has not performed as expected, which leads them to believe that the Metaverse itself is failing. However, the "Open Metaverse" is actually thriving, with a market valuation of approximately $18 billion, driven primarily by games. Areas where I think change will happen include platforms like Telegram and the TON ecosystem, which is facilitating the rapid growth of Web3 products. Since it is not restricted by the Web3 blockchain and NFTs of existing game distribution channels such as Apple, Google, Facebook, and Steam, it provides users with a brand new integrated experience.
Another key area is the games themselves, especially high-quality games that can bridge Web2 and Web3. Right now, we are seeing games that Web2 players enjoy without even knowing they are based on Web3. For example, Gunzilla’s “Off the Grid” in our portfolio is likely competing with PUBG and Fortnite for popularity. Players enjoy the game because it is fun, not necessarily because it is based on a blockchain. This approach can seamlessly introduce Web2 users to Web3 through experiences that players already love, such as games.
As for the development of global technology, I believe the next phase will be to continue to develop blockchains that can integrate user-friendly, immersive experiences. As a leader in this field, Animoca Brands is closely watching and innovating on emerging technologies that have the potential to redefine the metaverse and gaming.
MetaEra : As a Web 3.0 entrepreneur, what would you like to say to newcomers coming from Web 2.0 to Web 3.0?
Yat Siu : Overall, what I want to convey is that when you transition to Web3 and become a Web3 user, you will improve your financial literacy. In other words, you will have a deeper understanding of money, assets, and digital property rights, while becoming more skilled in managing financial affairs. I think the real revolution of Web3 lies in financial guidance and literacy: the transition from Web2 to Web3 teaches you new skills, such as understanding the value of assets, property, and money and how they work. This makes you a better investor and your own portfolio manager - something that is not usually taught in school, even though money is an essential tool in life. Web3 provides democratized access to financial knowledge and skills. In short, the transition from Web2 to Web3 enables you to improve your financial literacy and capabilities.
