The synchronization of government legislation and market expectations, the expansion of product range, the promotion of industry innovation, and the forward-looking outlook of hosting services are jointly shaping the future of Web 3.0.
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 took the lead in the launch. An important part of it is the "High-end Dialogue: Hong Kong Web 3.0 Influential Leaders". The person interviewed in this issue is Hong Kong Legislative Council member Qiu Dagen.
Introduction
Dagen Chiu is a member of the Legislative Council of Hong Kong, the President of the Hong Kong Information Technology Federation, and an investor in Hong Kong technology companies. With a deep background and rich experience in both technology and finance, he is committed to promoting the development of Web 3.0 and financial technology, and represents the technology innovation community in the Legislative Council of the Hong Kong Special Administrative Region, contributing to the development of this field.
Highlights
· The government has been responding to the emerging field of Web 3.0 at a fairly fast pace, which is unprecedented in history. The challenge we face is how to narrow the gap between the speed of government legislation and market expectations.
First, we hope that the government will expedite the processing of the remaining license applications so that virtual asset trading platforms can obtain legal operating qualifications as soon as possible. Second, we hope to explore expanding the range of products that trading platforms can trade. These are important matters that need to be followed up and promoted urgently.
The direction guided by the government is to develop more uses of stablecoins through different scenarios. We look forward to applications from wise people and hope that the industry can come up with different ideas.
The legislation on virtual asset custody services is expected to be submitted to the Legislative Council for discussion and approval next year, which is an extremely important step for the development of the entire Web 3.0 in Hong Kong.
Full Interview
MetaEra: As the two-year anniversary of Hong Kong's new Web 3.0 policy approaches, what progress do you think has left a deep impression on you?
David Chiu: My impression is that the government has responded to this emerging field at a fairly fast pace, which is unprecedented in history. However, there may still be a certain gap compared with the expectations of market practitioners. These practitioners, especially innovators in the field of science and technology, are accustomed to freely exploring and promoting the development of new products and new directions, and are not accustomed to being constrained by too many rules. This has been the case since the emergence and development of blockchain. In terms of legislation, the government has been moving quite fast in the past two years, including the promotion of exchanges, stablecoins, virtual asset over-the-counter transactions (VAOTC) and custody services. If we look back at the history of the Hong Kong government, we can actually see that the current legislative process is already very efficient. However, to achieve good interaction between the government and the market, both sides need to move towards each other.
It is understandable that market practitioners may not have fully considered the complexity and experience of government legislation. In the field of Web 3.0, Hong Kong needs to learn more from the methods and laws of financial supervision to enhance the trust of the industry. Legislation may be a new field for many industry practitioners, and they need time to adapt to this objectively slow pace. The challenge we face is how to narrow the gap between the speed of government legislation and market expectations.
I myself have been working hard to promote communication and understanding between the two sides. For example, I would tell the government that the Web 3.0 industry needs more inclusiveness and a faster legislative process; at the same time, I would also tell industry practitioners that Hong Kong's legislative speed is already relatively fast. In any mature economy or society, the normal legislative process takes a considerable amount of time. In order to balance this gap, we are also trying to gradually narrow the distance between the government and the market through methods such as pilot projects and regulatory sandboxes.
MetaEra: You mainly focus on the development of the technology field. As a member of the Legislative Council of the Hong Kong Special Administrative Region, how did you push the Hong Kong government to move towards the Web 3.0 new policy in the process of promoting Hong Kong's Web 3.0 new policy? What unforgettable experiences do you have? Can you share these stories with us?
Qiu Dagen: Regarding the unforgettable experience, I would like to emphasize the recognition of the future technology market size and the consensus formed by various government departments in this process. To reach a consensus, first of all, the market needs the government to recognize, support and welcome the development of the Web 3.0 industry from an administrative and public standpoint, and to recognize that the Web 3.0 industry is the future development direction, with long-term development potential and huge market size. Hong Kong also has the corresponding conditions and capabilities to promote the development of this industry.
It was not easy to reach this consensus, but in the process of promoting it, it was found that it was actually relatively smooth. This was due to the early discussions with the Financial Secretary. About two years ago, when we were discussing this industry, the Secretary quickly recognized the development prospects of the Web 3.0 industry and quickly expressed support, and also promoted the implementation of relevant policies from top to bottom. This also accelerated the release of the government's declaration, which clearly stated the government's understanding of the market potential of the Web 3.0 industry. This process was actually very short. I was personally impressed by this.
MetaEra: After the implementation of the new policy in Hong Kong, what changes have taken place in the regulatory framework for virtual asset trading platforms? What challenges and opportunities have these changes brought to platform operations?
Qiu Dagen: It is mainly reflected in the development of the licensing system for virtual asset trading platforms in Hong Kong in the past two years. Since the implementation of the licensing system, we have witnessed several trading platforms obtaining formal licenses. I also hope that the SFC will process other applications on the current application list as soon as possible, so that more trading platforms can operate legally in Hong Kong. After more platforms are compliant, what needs to be done next is to further enrich the types of products provided by trading platforms. Since June last year, the products that can be traded by licensed trading platforms in Hong Kong have expanded from Bitcoin and Ethereum to more virtual currencies, and ETF products for Bitcoin and Ethereum were also launched at the beginning of this year.
In order to attract more investors, we need to ensure that the products provided by the exchange are more diversified. Therefore, the next step of development includes two key points:
First, we hope that the government will expedite the processing of the remaining license applications so that trading platforms can obtain legal operating qualifications as soon as possible. Second, we will explore expanding the range of products that trading platforms can trade. We not only hope that exchanges can trade virtual currencies, but also hope to see more tokenized products, including the utility tokens and real-world assets (RWA) that have been discussed. These are important matters that we urgently need to follow up and promote.
MetaEra: What role do you think Hong Kong plays in international cooperation in the field of Web 3.0?
David Chiu: Web 3.0 itself is an international market. The Web 3.0 products launched by the industry in Hong Kong cannot be limited to the local market, because the local market is limited in size and cannot support the sustainable development of the business. We must think about how to promote Hong Kong's products internationally to meet the needs of the global market. Therefore, the licensing mechanism of the trading platform mentioned earlier, how to promote more innovative digital asset products in Hong Kong, and how to make these investment products available to people in other places through Hong Kong are all directions we will follow up.
MetaEra: What positive impact does the stablecoin sandbox launched by the Hong Kong Monetary Authority have on innovation in the Web 3.0 field? How do you evaluate the application and potential of the sandbox mechanism in regulatory practice?
Qiu Dagen: Stablecoins are very important. As we all know, they have developed rapidly in recent years. The issuance of the two major stablecoins has exceeded 100 billion US dollars, and the daily trading volume is huge. We can see that it is widely used, especially in the fields of international education and trade. This is actually very suitable for Hong Kong to manage and promote. Because Hong Kong has a natural advantage in international trade and investment payments, the use of stablecoins can save time, reduce costs, and improve transparency. Therefore, Hong Kong is fully capable of developing stablecoins as an important product. I feel that stablecoins are still in the early stages and have huge room for development. They are crucial as a bridge between legal tender and digital assets. The development of stablecoins will help promote the growth of other digital assets in Hong Kong, because if stablecoins are not well developed, other digital assets will also be difficult to develop. It is a key interface.
In the process of promoting stablecoins, Hong Kong needs to strike a balance in the following aspects. First, security is the most important. Stablecoins have had some problems in history, such as algorithmic problems or the stability of underlying assets. Hong Kong has the ability to provide a safe stablecoin environment. In addition to security, ease of use and innovation are also crucial, which requires the industry to think about how to issue and use stablecoins in Hong Kong. The direction guided by the government is to develop more uses of stablecoins through different scenarios. We look forward to applications from wise people, and hope that the industry can come up with different ideas to better tap the potential of stablecoins in future finance through Hong Kong's licensing mechanism. We believe that the industry's innovative thinking will open up new paths for the development of stablecoins and make them bigger and stronger through Hong Kong. This is not only the responsibility of the government, but more depends on the thinking and actions of the industry.
MetaEra: The Hong Kong government plans to introduce a regulatory framework for virtual asset custodians. How do you think this will enhance Hong Kong’s competitiveness in providing virtual asset custodian services?
David Chiu: I am very happy to see the development of custody. Initially, the government did not fully consider the custody mechanism when promoting Web 3.0. With the emergence of some problems, such as the FTX incident, the society has realized the need to better isolate and protect customer assets. Hong Kong must establish a legal framework for virtual asset custody services. I have also personally participated in this process. Over the past year or so, I have organized many discussions on custody and promoted custody issues with various government departments. Therefore, I am very excited to see the Chief Executive propose the idea of legislating virtual asset custody services in the Policy Address. This means a lot to me, because after more than a year of hard work, there is finally progress. It is expected that there will be an opportunity to submit it to the Legislative Council for discussion and passage next year. This is an extremely important step for the development of the entire Web 3.0 in Hong Kong.
MetaEra: The Hong Kong government has provided a range of financial support and incentives for Web 3.0 startups. Can you elaborate on these measures and how they help startups land and grow in Hong Kong?
David Chiu: When we first saw the potential of start-ups in the Web 3.0 field, the government handed over the relevant business to Cyberport and allocated HK$50 million to promote the landing and development of Web 3.0 start-ups in Hong Kong. Later, we saw that the demand for this area grew rapidly, and Cyberport has attracted hundreds of Web 3.0 companies in a short period of time. In view of the huge market demand, I think HK$50 million may not be enough to meet the demand, and I will continue to push the government to provide more support for Web 3.0 start-ups. Technology start-ups are the key force driving innovation and development. They will bring new ideas, new inventions and innovations. Especially when technology is developing, it depends on these startups to give vitality. Hong Kong has experts in the financial field, but it also needs experts in the technology field. The combination of the two can give birth to new ideas and new momentum. Therefore, I think there is still room for greater policy support for Web 3.0 start-ups. In the policy address, the government mentioned that it will provide funding for entrepreneurial accelerators, and each accelerator can receive up to HK$30 million in funds. I hope that at least one or two of these accelerators will focus on Web 3.0 technologies to better promote the development of Web 3.0 startups in Hong Kong.
MetaEra: The development of Web 3.0 technology poses both challenges and opportunities to the traditional financial industry. How do you evaluate the progress and strategies adopted by traditional financial institutions in Hong Kong in adapting to these changes?
David Chiu: In my opinion, the opportunities in the Web 3.0 field far outweigh the challenges. After this period of development, many traditional financial institutions have also seen the opportunities here. Everyone generally agrees that: first, this is an opportunity; second, regardless of personal views, Hong Kong must move towards digitalization and blockchain technology development. Financial institutions are also actively exploring how to play a role in Web 3.0. Although the current economic situation has slowed down some paces or made them more cautious in terms of costs, large financial institutions in Hong Kong are undoubtedly studying how to participate in and promote the development of Web 3.0. I hope that there will be more motivation in the future to prompt them to participate more actively. For example, the Project Ensemble project launched by the HKMA is a good driving force that can promote traditional financial institutions to work with the Web 3.0 team to jointly develop new tokenized financial products.
MetaEra: What specific advice or guidance do you have for businesses and individuals looking to enter the Web 3.0 space?
Qiu Dagen: For individuals, many people are very interested in this industry. For friends who are already involved, I think they need to have a deeper understanding of technology and lay a good foundation for technology, which is essential. There are many people in the financial sector in Hong Kong who are involved in the development of Web 3.0, but they often start from a financial perspective. I hope that friends in the financial sector can strengthen their understanding of the foundation of technology so that they can better grasp the development of Web 3.0. At the same time, people in the technology field should also have a deeper understanding of finance, because Web 3.0 is essentially a combination of financial technology, and professionalism is what we must have. Society should not only pursue methods to make quick profits, but should ensure that both technology and financial foundations are solid, so that excellent products can be created. Hong Kong provides a lot of support in terms of technology and financial knowledge, including professional talents and courses, and the government also has relevant subsidies. Everyone should lay a good foundation first, and then consider whether to start a business or join a corporate team.
It is also very important for companies to understand Hong Kong's advantages and its benefits to the company's development. I often say that the location of a startup is important and its help to startups cannot be ignored. Fintech, Web 3.0 and digital assets have good development prospects in Hong Kong, but the situation of each company is different, and it is necessary to consider how to take advantage of Hong Kong's advantages. I also noticed that some teams do not have a deep understanding of Hong Kong's regulatory and licensing system. I suggest that these teams and talents come to Hong Kong for inspection. I welcome them at any time and I am willing to share with them the existing policies and regulations in Hong Kong. Everyone must consider how to use Hong Kong's advantages to promote their own growth.
