Hong Kong is determined to compete as a global virtual asset hub

Source: Zhou Zhou, Huxiu Technology Group

Hong Kong has made a firm decision to compete with cities like Singapore, London, and New York for the status of a global crypto financial center and virtual asset hub.

On October 16, Hong Kong's Financial Secretary Paul Chan published an article titled "The Development of Innovation and Technology in Hong Kong," pointing out the need to promote Hong Kong as an international virtual asset center. Chan stated, "The policy declaration will clearly express the government's position, showing the global industry our vision of promoting Hong Kong as an international virtual asset center and our commitment to exploring financial innovation together with the global asset industry."

This also means that Hong Kong will further promote the development of NFTs (Non-Fungible Tokens), Web3, and the cryptocurrency market, all of which are financial and network innovations based on blockchain technology.

Web3 is an internet ecosystem based on blockchain technology, aiming to decentralize or partially decentralize the internet, allowing users more opportunities to control their data, assets, and digital identities. This new form of digital economy has attracted significant investment; according to the latest data from McKinsey, venture capital investment in Web3 exceeded $18 billion in the first half of 2022, with a total of $32.4 billion in venture capital for the entire year of 2021.

Since the beginning of this year, multiple financial centers around the world have announced their intentions to become virtual asset centers and crypto financial hubs, attracting entrepreneurs and companies in this field.

At the Hong Kong FinTech Conference at the end of October, some innovations related to Web3 will be showcased. Chan revealed that this year's Hong Kong FinTech Week will incorporate concepts such as Web3 and the metaverse, including distributing limited edition attendance certificate tokens in the form of non-fungible tokens (NFTs) to participants, allowing token holders to create exclusive virtual avatars through 3D scanning, providing a new experience for attendees, and enabling token holders to have priority access to other industry events in the future. This trend of issuing NFT attendance certificates to participants has become popular; these certificates often lack a physical form and exist only as digital certificates, but because they are made into NFTs, they acquire collectible and trading value.

Within Asia, cities (countries) hoping to become global crypto financial centers and virtual asset hubs include, but are not limited to, Tokyo, Singapore, Seoul, and Bangkok.

In May 2022, Japanese Prime Minister Fumio Kishida stated that the arrival of the Web3 era could lead to economic growth in Japan. He mentioned that integrating new digital services such as the metaverse and NFTs would bring economic growth to Japan. "As we enter the Web3 era, I strongly believe we must resolutely promote this environment from a political perspective."

A Tokyo city councilor, Yu Ito, publicly announced plans to transform Tokyo into a crypto financial center, claiming that embracing crypto assets could help Tokyo compete with London and Hong Kong.

Singapore is often compared to Hong Kong due to similarities in population, city size, and financial policies. At the end of September, the "TOKEN 2049" crypto conference in Singapore recently concluded, attracting over 7,000 attendees, more than 2,000 companies, and over 250 sponsors, hosting hundreds of events.

According to data from the asset trading platform OKX, in collaboration with the third-party recruitment platform LinkedIn, the "2022 Global Blockchain Talent Report - Web 3.0 Direction" indicated that as of June 2022, the United States, India, China, the United Kingdom, and Singapore were the top five countries for blockchain talent globally, with Singapore showing a high growth rate in talent.

Outside of Asia, in April 2022, UK Chancellor Rishi Sunak tweeted, "We are working to make the UK a global crypto asset center." The UK government’s official website published an article titled "Government Plans to Make the UK a Global Crypto Asset Technology Center," announcing a partnership with the Royal Mint to develop NFTs. In the United States, Miami Mayor Francis Suarez proposed transforming Miami into the new Silicon Valley of Web3; New York City Mayor Adams stated that New York is the center of the world and hopes it will become a hub for cryptocurrency and other financial innovations.

FinTech is a strength of Hong Kong, which currently has over 600 FinTech companies, covering areas such as mobile payments, cross-border wealth management, and virtual asset trading, demonstrating a solid foundation in the FinTech sector. Since the beginning of this year, several Hong Kong government officials have continuously voiced their intentions to develop the crypto finance and digital asset industry.

In August 2022, former Hong Kong Financial Secretary John Tsang stated that the virtual economy is important for Hong Kong and encouraged the younger generation to actively participate and adopt technology through Web3; in September 2022, former Chairman of the Hong Kong Securities and Futures Commission, Tim Lui, suggested establishing a cross-border digital currency trading center in Hong Kong; the same month, Hong Kong Financial Secretary Chan Ho-lam pointed out that security token offerings have already been issued in Hong Kong, emphasizing the government's commitment to supporting the steady development of FinTech in Hong Kong, including security token offerings.

Of course, Hong Kong's Web3 development still faces many challenges. In terms of policy openness, it lags behind Singapore and South Korea; in terms of technical talent reserves, it falls short compared to first-tier cities like Shenzhen and Beijing; and in terms of the number of Web3 companies, it is far fewer than New York and Silicon Valley in the United States. How to differentiate itself in the crypto finance sector and find the most suitable path for development has become a question that Hong Kong's financial industry is contemplating.