Hong Kong Web3 Summit Briefing: Full Speech by Financial Secretary Paul Chan

Author: Chan Mo-po, Secretary for Financial Services and the Treasury of Hong Kong

Source: MarsBit

The following is the speech delivered by Secretary Chan Mo-po at the POW'ER Hong Kong Web3 Innovators Summit today (January 9):

Mr. Wang Feng (Founder of Marsbit), Simon (Chairman of the Board of Hong Kong Cyberport Management Company Limited, Chan Sai-ming), Peter (CEO of Hong Kong Cyberport Management Company Limited, Ren Jingxin), Johnny (Chairman of Gono International Accelerator, Wu Jiezhuang), Duncan (President of the Hong Kong Information Technology Federation, Qiu Dagen), distinguished pioneers from the industry, and friends:

Good morning! I am delighted to attend the opening ceremony of the Web3 Innovators Summit today and meet with a group of pioneers in the fintech field. Taking this opportunity, I would like to wish all friends good health, prosperous careers, smooth work, joyful lives, and successful endeavors in the new year!

I know that some friends here today are visiting Hong Kong for the first time in several years; there are also friends who may have had doubts about Hong Kong's development in the past, but have recently heard many positive evaluations of Hong Kong's new opportunities and development potential, and have come to see for themselves. Your cutting-edge technology, market sensitivity, and networking are all advantages on the entrepreneurial path, and I believe these advantages have attracted you to come to Hong Kong. I can tell you that Hong Kong's development is at a new historical starting point, and the Web3 ecosystem is also entering a new stage. The combination of the two has brought us together today to witness a golden new starting point for Web3 development.

As Mr. Wang Feng mentioned, Web3 is a decentralized internet concept based on blockchain, supported by Distributed Ledger Technology (DLT), which can be effectively applied at multiple levels and links in the global financial market. In fact, many financial institutions are exploring how to tokenize financial assets to enhance efficiency and improve transparency; they are also actively trying to solve efficiency and security issues in clearing, settlement, and payment that have persisted for decades with new concepts and technologies.

In terms of financial development related to Web3 and virtual technologies, Hong Kong can be said to be at a golden new starting point, and allow me to provide a brief explanation.

First, Hong Kong is entering a new stage of "from governance to prosperity," with the new term of the SAR government fully promoting the combination of a "proactive government" and a "highly efficient market." Under the policy of "attracting enterprises" and "attracting talent," in the past two months, many leading innovation and technology enterprises and high-tech startups have actively contacted us, considering establishing international headquarters in Hong Kong or expanding their business scale here, and many are also planning to list in Hong Kong.

In fact, over the past few years, Hong Kong has rapidly developed in the fintech sector and is one of the most vibrant fintech ecosystems in the region, with achievements that are evident. The virtual asset industry is also steadily developing in Hong Kong. The Securities and Futures Commission has granted two virtual exchange licenses, and the first virtual asset ETF was recently successfully listed. We are confident that Hong Kong will soon develop a thriving virtual asset ecosystem.

Second, there is Hong Kong's status as an international financial center. Hong Kong has been rooted in the international financial market for decades and enjoys a good reputation. Our regulatory framework and systems align with international rules, gaining widespread recognition internationally, allowing fintech companies in Hong Kong to better use this platform to develop international business and explore cross-border cooperation.

Against this backdrop, we dared to publish the "Policy Declaration on the Development of Virtual Assets in Hong Kong" last October—what we considered a suitable time—so that innovators engaged in virtual asset business worldwide would know that Hong Kong embraces financial innovation and actively promotes the prudent development of this market. In the context of repeated collapses of virtual asset exchanges, Hong Kong has become the best foothold for quality virtual asset enterprises.

The characteristics of virtual assets and trading have disrupted many traditional business models; however, without appropriate regulation, the so-called "free-rider" problem could severely undermine the sustainability of industry development. Therefore, our approach is to provide appropriate and proportionate regulation to unleash the potential of Web3 and other technologies, allowing them to improve the efficiency and transparency of economic, financial, and other commercial activities at different levels and links, benefiting the real economy, investors, and citizens. In formulating regulatory details, we adopt the principle of "same activity, same risk, same regulation" to address actual and potential risks, ensuring that while Web3 and virtual assets thrive, they do not create risk gaps in financial stability, investor protection, and the regulation of improper funding activities.

In terms of specific measures, we have recently completed the legislative work for establishing a licensing system for virtual asset service providers, which will be implemented in June this year. Under the new system, the requirements for virtual asset exchanges regarding anti-money laundering, anti-terrorist financing, and investor protection will be consistent with those currently applicable to traditional financial institutions, which we believe will provide a certain degree of market recognition for virtual asset exchanges. Under the relevant regulatory conditions, financial intermediaries and banks will be able to collaborate with licensed virtual asset exchanges when providing trading services to clients. This combination and interaction between virtual and real will provide new soil, nurturing new models, new markets, and new opportunities, and I believe it will also create a new batch of successful individuals.

Beyond regulation, the government and regulatory agencies are also conducting several pilot projects to test the technological advantages of virtual assets and explore their further applications in the financial market. Pilot projects include tokenizing government-issued green bonds for institutional investors to subscribe to, as well as the cross-border application of the central bank digital currency eHKD. Although these projects are small steps, they also demonstrate our commitment and determination to explore financial innovation together with the global virtual asset community.

Distinguished guests and friends, we sincerely invite the global virtual asset industry to join hands with us, utilizing Hong Kong's international financial center's clear, appropriate, and internationally aligned regulatory framework to unleash the potential of financial innovation. We also warmly welcome the global fintech and virtual asset community and talent to develop in Hong Kong, joining us to embrace the vast opportunities brought by the development of Web3 and virtual assets.

Finally, I wish the summit great success and that everyone returns with fruitful results. Thank you all!