Author: Lawyer Liu Honglin
Recently, Wu said blockchain conducted an in-depth interview with Mr. Liang Hanjing of Invest Hong Kong ("Wu said dialogue with Invest Hong Kong: Hong Kong has the natural advantages to develop Web3 and cryptocurrency"), and talked about the development direction of Hong Kong in the field of Web3 and cryptocurrency. From policy support to market feedback, to capital flow and attempts at tokenization of real world assets (RWA), it systematically demonstrated Hong Kong's layout in this emerging field.
How does Hong Kong support the Web3 industry?
During the interview, Mr. Liang introduced the main work of Invest Hong Kong in the field of Web3. He emphasized that Hong Kong has always been known for its free market and international brand. Its capital liquidity, mature regulatory framework and close connection with the international market give it a natural advantage in developing Web3 and cryptocurrency. From the government's perspective, the main function of Invest Hong Kong is to attract international companies to settle in Hong Kong and assist them in obtaining more resources in the market. Whether it is from mainland China, the United States, the United Kingdom, or a Chinese entrepreneurial team, they can establish connections with local banks, investment institutions, and government departments through Invest Hong Kong's channels to speed up the process of market connection.
In terms of industry promotion, InvestHK also plays an important role. For example, they actively participate in and support large-scale events such as the Consensus Conference and Hong Kong Fintech Week, aiming to build a communication platform for Web3, virtual assets, fintech and blockchain companies, and attract more companies to pay attention to the Hong Kong market. Policy feedback is also an important responsibility of theirs. Since InvestHK has close daily contact with companies, it can learn about the dynamics and needs of the industry at the first time, and pass this information to the regulatory authorities, so that policy making can be closer to the actual development of the industry.
In addition, InvestHK is also promoting the integration of large industry resources. For example, Project Ensemble, launched by the Hong Kong Monetary Authority (HKMA), aims to promote the tokenization of RWA (real world assets), which has attracted many banks and technology companies to participate. However, even if many international companies have heard of this project, it is difficult to directly connect with regulators or investors. InvestHK has played a key role in this process, helping companies find the right connection channels through its market network so that they can smoothly participate in the development of Web3 in Hong Kong.
Mr. Liang mentioned in the interview that Hong Kong has always supported the development of the Web3 industry and has not experienced drastic changes in policies. From the government's perspective, Hong Kong is a free market with free capital flow, so it has a natural advantage in developing cross-border and borderless industries. The core characteristics of the Web3 industry are globalization and decentralization, which are highly consistent with Hong Kong's financial ecology. Therefore, Invest Hong Kong has been paying attention to this industry for a long time and has continued to support it.
However, although Hong Kong is generally supportive of Web3, it remains cautious in specific policies. For example, in the field of ICO (initial coin offering), Hong Kong does not adopt a completely liberalized policy, but sets a relatively strict entry threshold. At present, licensed exchanges in Hong Kong need to undergo strict due diligence (DD) before listing new tokens to ensure the legality and feasibility of the project. Only projects that meet compliance requirements have the opportunity to operate in the Hong Kong market. This model is actually a reflection of the Hong Kong government's pursuit of a balance between market openness and investor protection.
The three core directions of Hong Kong Web3
During the interview, Mr. Liang mentioned several core areas of Hong Kong's development in Web3 many times, which not only involves policy direction, but also relates to Hong Kong's strategic positioning in the global crypto market.
At present, the development of Web3 in Hong Kong is mainly concentrated in three key areas: stablecoins and cross-border payments, tokenization of real-world assets ( RWA ), and digital culture and Crypto Native industries. These three areas are in line with Hong Kong’s traditional financial advantages and conform to the development trend of the global digital asset market.
Stablecoins and cross-border payments: key links in the transition from traditional financial system to Web3
Mr. Liang mentioned in the interview that the largest market for stablecoins lies in cross-border payments , especially in the B2B trade sector.
The existing international cross-border payment system often has problems with long transaction times and high costs, especially in developing countries and some emerging markets. When some international trade companies conduct cross-border transactions, it may take several days or even a week for funds to be settled, and the payment fee in some regions is as high as 10%. Compared with traditional cross-border bank transfers, stablecoin transactions have the advantages of low cost, high efficiency, and 24-hour availability. The application of stablecoins can greatly shorten transaction time, improve capital turnover efficiency, and reduce exchange costs. Therefore, Hong Kong hopes to use its status as a financial center to promote the compliance development of stablecoins and make them an important payment tool in the global trade and financial markets.
The two major stablecoins USDT (Tether) and USDC (Circle) have been widely used in cross-border payments, but their compliance has always been the focus of governments. In contrast, Hong Kong hopes to launch a compliant stablecoin to provide companies with a payment tool that meets regulatory requirements and meets market demand.
Hong Kong's Monetary Authority (HKMA) launched a stablecoin regulatory framework in 2023 and encouraged the establishment of regulated stablecoin issuers in Hong Kong. The Hong Kong government is promoting a regulated stablecoin pilot, hoping to use blockchain technology to improve the settlement efficiency of financial transactions.
This strategy has two important market backgrounds: first, the demand for stablecoin payments among global foreign trade companies is growing rapidly, especially Chinese cross-border e-commerce companies and foreign trade companies, which need more efficient and low-cost international settlement tools; second, Hong Kong itself is a major financial hub in Asia. If it can gain an advantage in stablecoin clearing and settlement , it will help enhance its influence in the global crypto financial market.
Judging from market trends, the role of stablecoins is far more than just the flow of funds in exchanges. It is becoming an important infrastructure for international trade payments, supply chain finance, and even central bank digital currency (CBDC) experiments. Hong Kong's stablecoin regulatory pilot project is likely to attract more companies to set up stablecoin issuance and settlement businesses here in the future, thereby strengthening Hong Kong's central position in the Web3 financial ecosystem.
Tokenization of Real World Assets ( RWA ): A Bridge Between Traditional Finance and Web3
RWA (Real-World Assets) tokenization is one of the most important Web3 directions in the global financial market, and Hong Kong's layout in this area is particularly critical. RWA tokenization refers to the conversion of traditional financial assets (such as bonds, stocks, real estate, funds) into digital assets on the blockchain, enabling them to be traded on a decentralized network and improving liquidity.
Mr. Liang mentioned in the interview that Hong Kong has actual cases in the layout of RWA tokenization. For example, in 2023, the Hong Kong government launched the world's first tokenized green bond (Tokenized Green Bond) , and conducted a second round of pilot in 2024. This move not only shows Hong Kong's innovative attempt in the global green finance market, but also shows that the government hopes to improve the transparency and liquidity of the capital market through blockchain technology.
The potential market size of RWA tokenization is huge. According to a white paper jointly released by Boston Consulting Group (BCG), Invesco and AxoneChain, the global fund tokenization market is expected to reach US$610 billion . Currently, many financial centers around the world are promoting RWA tokenization projects, such as Switzerland, the United Arab Emirates and some states in the United States, and Hong Kong also hopes to take a leading position in this field.
Hong Kong has several core advantages in the development of RWA tokenization: first, Hong Kong itself is an important hub for the global capital market with a large group of institutional investors; second, Hong Kong’s financial regulatory system is relatively mature and can provide stable legal and compliance support; finally, Hong Kong’s banking and securities market infrastructure is already highly digitized, which provides realistic technical support for RWA tokenization.
The implementation of RWA tokenization will bring new investment opportunities to the Hong Kong capital market. For example, traditional real estate funds, infrastructure investment funds and private equity funds can all improve liquidity and market participation through blockchain tokenization. At the same time, the trading efficiency of tokenized securities is much higher than that of the traditional securities market, which will help enhance the competitiveness of Hong Kong's financial market. In the future, as the Hong Kong government continues to promote the improvement of the relevant regulatory framework, RWA tokenization is likely to become one of the core competitiveness of its Web3 development.
Digital Culture and Crypto Native Industry: Unique Business Opportunities of Web3 in Hong Kong
In addition to stablecoins and RWA tokenization, Hong Kong also has unique advantages in digital culture and Crypto Native industries (i.e. native crypto industries). Mr. Liang mentioned in the interview that Hong Kong is not only an international financial center, but also the world's second largest art auction market , second only to New York, and surpassed London in 2020. This means that Hong Kong naturally has the soil to develop NFT (non-fungible tokens) and digital art markets.
After the NFT industry experienced a wave of enthusiasm in 2021, the market returned to rationality, but Hong Kong's digital cultural industry continued to develop. Many high-net-worth investors and the second generation of the rich are very interested in digital artworks, and Hong Kong's international environment makes it an ideal place for digital artwork transactions and NFT development. For example, international auction houses such as Sotheby's and Christie's have begun to accept the auction of NFT artworks, which has created more business opportunities for Hong Kong's digital cultural industry.
In addition to NFT, Hong Kong is also a gathering place for Chinese Crypto Native entrepreneurs, especially in the field of C-end applications (such as encrypted social networking, Web3 games, on-chain content platforms, etc.). Many Web3 companies in Western markets are more focused on infrastructure, while Chinese entrepreneurs have accumulated rich experience in C-end applications in the Web2 era, such as e-commerce, social networking, and content platforms. Hong Kong has a friendly policy environment, abundant funds, and as an international city, it is very convenient to connect with overseas markets. This has led many Chinese Web3 entrepreneurs to choose to set up international headquarters in Hong Kong to explore new opportunities for C-end applications.
In terms of digital culture and Crypto Native industries, Hong Kong's commercialization opportunities go far beyond NFT transactions. For example, some well-known brands have begun to try to implement Metaverse - related projects in Hong Kong, including brand virtual space, digital fashion, etc. The influence of Hong Kong's international film and television culture also provides great possibilities for the application of Web3 technology in entertainment fields such as film, music, and games.
In the future, Hong Kong may promote more NFT and digital asset compliance attempts to attract international digital artists, game developers and content creators to enter the Hong Kong market. If Hong Kong can establish a clear regulatory framework for the Web3 cultural industry and provide more commercialization channels for content creators, it is likely to become one of the important centers of the global Web3 cultural industry.
Lawyer Mankiw's Summary
From the perspective of the global competition landscape, Hong Kong's Web3 development model is different from that of financial centers such as Singapore, Dubai, and Switzerland. Singapore is more focused on the early Web3 entrepreneurial ecosystem, Dubai attracts global funds through loose regulations, and Hong Kong's strategy is to deeply integrate Web3 into the traditional financial system and promote industrial upgrading through compliance.
The development of stablecoins in Hong Kong focuses on meeting cross-border payment needs rather than simply promoting the expansion of the crypto trading market. The development of RWA tokenization is an attempt to use blockchain technology to improve the liquidity of asset transactions under the trend of global capital market transformation. In the digital cultural industry, Hong Kong hopes to use its advantages in the international art market to explore the possibility of new business models such as NFT and Metaverse.
Hong Kong does have a "natural advantage" in the Web3 field, but its future will not be an automatic success , but requires continuous optimization of policy implementation, market development, and global competitiveness. Hong Kong's core position is still an international financial center, and Web3 is only an important part of financial innovation. Finding a balance between regulation, market demand, and compliance framework will determine whether Hong Kong can truly become a global hub for Web3.
From a legal perspective, although the development of Web3 in Hong Kong is full of opportunities, compliance is always the most important cornerstone. For industry participants, understanding the regulatory logic and rationally planning the business model will be the key to gaining a foothold in the Hong Kong market. For Web3 companies that want to enter Hong Kong, now is the most critical window period: Hong Kong's policy environment is becoming clearer, and market opportunities are gradually emerging . However, companies still need to make compliance plans when entering the market, especially in terms of capital flow, regulatory licenses and business models , to ensure compliance with Hong Kong's financial rules.
