Hong Kong Continues Efforts to Become a Web3 Hub in Asia
Hong Kong is taking further steps towards becoming a hub for web3 innovation in Asia. The city’s government plans to issue more policy papers and circulars on tokenized assets, stablecoins, and cryptocurrency trading. Despite recent crackdowns on the JPEX crypto exchange, Christopher Hui, Secretary for Hong Kong’s Financial Services and the Treasury, stated that the government’s determination to grow the web3 market remains strong.
The Securities and Futures Commission (SFC) will soon release circulars related to intermediaries engaging in tokenized securities-related activities and the tokenization of SFC-authorized investment products. Additionally, regulators are exploring ways to expand their oversight beyond trading platforms to cover buying and selling of virtual assets. The Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau will also issue a joint consultation on the regulatory regime for stablecoin issuers.
New Possibilities for Tokenization
Eddie Yue, Chief Executive of the HKMA, revealed that tokenized bonds have moved beyond proof of concept and have been used in real transactions. He mentioned that the government assisted in issuing the world’s first-ever tokenized government green bond earlier this year to demonstrate Hong Kong’s compatibility with this issuance format. The industry is now discussing future tokenized issuances to explore new possibilities. Yue also expects an increase in tokenization for supporting gradual adoption, as well as greater use of blockchain-based payment methods such as stablecoin wallets or tokenized deposits offered by banks.
New Risks Associated with Tokenization
Julia Leung, CEO of the SFC, announced that the regulator will issue two circulars regarding tokenization. One circular will address risks associated with this technology and the expectations from intermediaries during due diligence and primary issuance. The other circular will focus on the SFC’s requirements for issuing authorized funds and implementing additional safeguards. Leung emphasized the need to ensure secure custody transfer and proper ownership records for tokens due to the innovative nature of the technology. While supportive of industry experimentation, she highlighted the new risks associated with tokenization.
Hot Take: Hong Kong’s Commitment to Web3 Innovation
Hong Kong remains committed to fostering web3 innovation despite recent challenges. The government’s determination to grow the web3 market is unwavering, as demonstrated by its plans to issue policy papers and circulars on various aspects of crypto trading and tokenization. The city’s regulators are actively exploring ways to expand their oversight beyond trading platforms and ensure the safe adoption of virtual assets. Additionally, Hong Kong is embracing tokenization, with real-world applications already in use, such as tokenized bonds. As Hong Kong continues on its path to becoming a web3 hub in Asia, it aims to balance innovation with managing the risks associated with this new technology.
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