Dialogue with Hong Kong Legislative Council Member Wu Jietzhuang: Systematically and in phases promote Hong Kong as a Web3 development center

Guest: Wu Jiezhuang, Hong Kong Legislative Council Member, Co-founder of G-Rocket

Interview: Nianqing, ChainCatcher

On June 1, the "Guidelines for Virtual Asset Trading Platform Operators" officially came into effect, and the Hong Kong Securities and Futures Commission began accepting license applications from virtual asset trading platform operators, allowing retail investors to use licensed virtual asset trading platforms. This is a key step for Hong Kong in implementing the "International Virtual Asset Center Plan."

In 2023, Hong Kong officially embarked on a new era of reasonable regulation and openness towards virtual assets. In February of this year, the Hong Kong Securities and Futures Commission released a consultation document on regulatory proposals for virtual asset trading platforms, showcasing the government's embracing attitude and firm determination towards Web3; in April, the Web3 Carnival brought unprecedented vitality to Hong Kong, during which the Hong Kong Web3.0 Association was officially established and the Web3Hub Fund was launched, initiating a $100 million Web3 ecosystem fund.

Wu Jiezhuang, a member of the Hong Kong Legislative Council and co-founder of the entrepreneurial accelerator G-Rocket, is also an important leader and contributor to Web3Hub. Before 2022, Wu was active in the internet and Web3 fields as an investor. After being elected as a member of the Legislative Council in January 2022, he was determined to leverage this position to promote Hong Kong's policies and regulations regarding Web3 and virtual assets, creating a better environment for entrepreneurs coming to Hong Kong.

Additionally, through platforms like the entrepreneurial accelerator G-Rocket and the Web3Hub Fund, Wu has provided comprehensive and systematic support for Web3 entrepreneurs based on their more practical and urgent needs, creating a more friendly industry ecosystem to drive more unicorn projects to truly take off.

What is the real entrepreneurial environment for Web3 in Hong Kong? What specific aspects does Hong Kong's regulation cover? How can Web3 companies better establish themselves in Hong Kong? What tangible policy supports are available? What funds can be applied for? How to apply?

As Hong Kong attracts attention, ChainCatcher interviewed Member Wu Jiezhuang on these topics of greatest interest to Web3 entrepreneurs. Below is the full interview:

1. ChainCatcher: When did you first get involved in the Web3 industry?

Wu Jiezhuang: I became an investor around 2010, focusing on the internet and artificial intelligence fields, although the concept of Web3 did not exist at that time. In 2017, I read the Bitcoin white paper written by Satoshi Nakamoto, and it was then that I fully understood the essence of blockchain and its value. Coincidentally, that same year, many blockchain-themed summits were held in Hong Kong and Macau, providing me with numerous opportunities to gain in-depth insights into the industry, and I began to support some projects.

Overall, blockchain applications were still in their infancy at that time; people were more focused on mining, and there was little integration with the real economy, with few tangible applications. However, after 2020, the term Web3 began to be mentioned more frequently, and its connotation gradually became comprehensive, with innovative applications like GameFi and DeFi gaining popularity. The internet also began to shift from centralization towards decentralization. We can see that more and more young people are participating in this industry, and friends from traditional industries are slowly shifting from a completely resistant attitude a few years ago to a willingness to understand and gradually embrace Web3.

So starting in 2021, I began to actively participate in investments in the Web3 ecosystem and engage in the development of some projects. I also hope to create a better platform for more friends to develop in this space. It was also in that year that Hong Kong initially introduced a virtual asset policy declaration, attracting more attention to Hong Kong. In January 2022, after being elected as a member of the Legislative Council, I decided to leverage this identity to contribute to the promotion and balance of government policy and market regulation.

2. ChainCatcher: Which specific segments of Web3 do you personally find most promising?

Wu Jiezhuang: The entire ecosystem of Web3 is quite extensive, including exchanges and virtual asset management under a licensing system. Once operated in compliance, it will be a great track; in addition, some tangible applications like the gaming industry. I believe the traditional gaming sector has reached a relatively saturated stage, and the impact brought by GameFi will attract more traditional gamers to participate; the application space for NFTs is also vast. However, the sustainability of merely trading images is limited. Once NFTs are applied in areas like copyright automation and intellectual property, they will unleash significant potential.

3. ChainCatcher: What was the original intention behind founding the entrepreneurial accelerator G-Rocket? G-Rocket previously planned to help 1,000 Web3 startups establish offices in Hong Kong within three years. What is the current progress?

Wu Jiezhuang: G-Rocket was actually founded quite early, around 2016. However, it initially did not focus on Web3; at that time, this entrepreneurial accelerator mainly supported Hong Kong youth to start businesses in the Greater Bay Area. We established physical accelerators in Qianhai, Shenzhen, Nansha, Guangzhou, and other cities in mainland China, with the original intention of supporting young people from Hong Kong to start businesses in the mainland, as they were not very familiar with the development there. These accelerators have developed quite well, incubating about 300 enterprises over the years, spread across various industries and fields, including the internet, AI, and big data.

Starting from last year, I saw opportunities in the Web3 field, as young people from Hong Kong, the mainland, and even Singapore and Dubai were trying more creative ideas in this area. Therefore, we also hope to use the G-Rocket platform to help them develop in Hong Kong.

We have a dedicated team to provide support, including visa applications for entering Hong Kong, office space, policies and regulations for establishing in Hong Kong, how to apply for support funds, finding partners, and recruiting in Hong Kong, among a series of services. This helps improve the success rate of young entrepreneurs.

The announcement of the plan to help 1,000 Web3 startups within three years was made at the beginning of this year. Although only about four months have passed, over 400 companies have already registered on the platform, with 100 having already established themselves in Hong Kong. So we are not far from the goal of 1,000; after all, we have already achieved 10% of the target in just a few months. I estimate that it won't take three years; perhaps by the end of this year or early next year, we could complete the establishment of 1,000 Web3 companies.

Of course, as an entrepreneurial incubator, G-Rocket cannot ensure that all 1,000 companies will succeed. The platform's positioning is primarily to provide early support for companies newly developing in Hong Kong. Based on this, we launched the Web3 ecosystem fund and an acceleration plan at the Hong Kong Carnival in April to further support the incubation of 1,000 or more companies. We hope that among these 1,000 companies, 10 to 20 can become true leading enterprises or unicorns, as it is meaningful to progress in both quantity and quality.

4. ChainCatcher: In what specific ways will G-Rocket help Web3 startups? What are the criteria for selecting companies?

Wu Jiezhuang: As mentioned earlier, in addition to providing basic support such as office space, registration services, and financial services, we also help companies understand the Hong Kong policy environment, legal regulations, and subsidy applications that they may not be familiar with. However, these supports are quite superficial; the more important aspect is building the entire Web3 ecosystem.

Every company is different, and to develop, they need to establish key partnerships and resources such as major clients and investors. Our acceleration plan will try to help them match these resources according to their actual issues. The ecosystem fund aims to build the entire Web3 ecosystem and create a better environment.

Regarding the selection criteria, we have a professional team that collaborates with external consultants to form a selection committee. Of course, the evaluation criteria vary for different segments.

I personally pay close attention to the qualities and attitudes of entrepreneurs, such as whether they have confidence in their projects, how determined they are for the project's success, and whether they have a long-term positive outlook on the future of the Web3 sector. I also welcome friends with multiple entrepreneurial experiences; even if they have failed, we are very willing to hear their insights.

Ultimately, the final decision will still be based on the experience of our entire team.

5. ChainCatcher: In April, the Hong Kong Web3Hub Global Acceleration Program announced the launch of a $100 million Web3 ecosystem fund, based in Hong Kong and investing in projects globally. How does this fund differ from G-Rocket's positioning?

Wu Jiezhuang: G-Rocket's funding scale is relatively small, with a total amount of $10 million. We hope to reach more companies, although the amount each project can apply for is limited. The key aspect of this platform is the matching and ecosystem services it provides.

The 1,000 companies supported by the accelerator may ultimately succeed in incubating a few dozen companies. At that point, our $100 million Web3 ecosystem fund can play a role in further supporting and investing in these reliable projects. Currently, some industry giants have become LPs of our Web3 ecosystem fund, and they can further assist the unicorn companies mentioned earlier.

Therefore, G-Rocket and the Web3 ecosystem fund are positioned to help Web3 companies from the "0 to 1" stage and the "1 to 100" stage, respectively.

Around mid-May, our first phase of the $100 million fund will invest in specific companies, and in June, we will officially announce the news, allowing everyone to see the list of the first batch of companies.

6. ChainCatcher: Does the current Web3 ecosystem fund have specific segments it focuses on?

Wu Jiezhuang: This fund actually covers the entire Web3 ecosystem and does not focus on one or two specific segments. It will involve exchanges, wallets, big data platforms, the metaverse, and even artificial intelligence.

7. ChainCatcher: It seems that from G-Rocket to the launch of the Web3 ecosystem fund in April, there is a very systematic, phased, and gradual support plan for Web3. Besides this, will Web3Hub have any further actions?

Wu Jiezhuang: Our goal is still to make Hong Kong a Web3 development center in Asia. Next, we also hope to attract more foreign entrepreneurs to develop in Hong Kong, as currently, Hong Kong's Web3 scene is primarily dominated by the Chinese community, and there is still a distance to true internationalization.

The goal of this Web3 ecosystem fund is actually "based in Hong Kong, investing globally." My next plan is to have a more global perspective in the fourth quarter, or at the latest next year, to spend more effort on countries outside of Asia, covering more projects in Europe and America.

8. ChainCatcher: If projects like Hong Kong Web3Hub and G-Rocket guide industry elites from the financial and technical aspects, what attractive conditions has the Hong Kong government offered to Web3 entrepreneurs? What policy supports will be provided?

Wu Jiezhuang: Hong Kong currently operates under common law, which is quite different from civil law. In fact, Hong Kong's laws do not explicitly state what cannot be done, providing a good soil for financial and technological innovation.

As everyone knows, Hong Kong has officially started the licensing system for virtual asset trading platforms. It may be mistakenly thought that anyone engaging in Web3 in Hong Kong must obtain a license, but that's not necessarily the case. The licensing regulations in Hong Kong are mainly divided into two parts: the first is for exchanges, which must operate in compliance starting from June 1; the second involves virtual asset management, which also requires a license. Apart from these two areas, Hong Kong does not have explicit regulations for other Web3 businesses.

Therefore, in reality, Hong Kong's policies are quite open, and developing Web3 in Hong Kong is very free. If you plan to create a game and issue a token, there are no issues in Hong Kong; the key is whether the token issuance involves securities or futures components, as this part will be subject to regulation. Hong Kong's regulation has always existed and is quite clear, with almost no gray areas. I believe that in terms of legal policies, the Hong Kong government is relatively stable and considers long-term implications. This is also the government's greatest support for Web3.

Additionally, there are policies regarding entrepreneurial funds that entrepreneurs are quite concerned about. Currently, there are many types of funds in Hong Kong that can be applied for, such as maker funds, research funds, etc. If a project requires market promotion, there are also special promotion and development funds; furthermore, if your project obtains a patent in Hong Kong, you can apply for intellectual property funds. There are quite a few subsidies available, and those interested can check and apply on the official website.

9. ChainCatcher: What deep-seated impacts will the Hong Kong virtual asset (VASP) licensing system, implemented on June 1, have on the development of virtual assets in Hong Kong?

Wu Jiezhuang: After implementing the virtual asset licensing system, exchanges regulated by the Securities and Futures Commission will rightfully adhere to the anti-money laundering (AML) and KYC obligations strictly examined by statutory bodies, allowing for seamless integration with the banking system.

Thus, in terms of virtual asset trading, both project parties and trading investors will be placed under a stable and predictable legal and regulatory framework, ensuring the legality and safety of their funds. I believe the entire industry hopes for such regulation, as there will be no need to wander to small countries that cannot guarantee fund safety. Hong Kong is an international financial center, and in terms of both the breadth and depth of funds, it ranks among the top in Asia, so this system will also bring a new direction for future investors.

After the licensing system was introduced, many people expressed a desire to participate in virtual asset trading in Hong Kong legally and compliantly, so there have been quite a few applications for licenses, and many have consulted us. Therefore, we maintain very close communication with law enforcement and regulatory agencies to help more companies in need obtain licenses.

10. ChainCatcher: Some opinions currently suggest that Hong Kong's direction in developing Web3 will lean more towards finance, with compliant exchanges and similar enterprises having more development space, but it will be difficult to produce major killer applications (such as social or gaming applications). What is your view on this perspective?

Wu Jiezhuang: This is a trend I do not want to see happen, which is why we are now promoting the Web3 entrepreneurial accelerator and ecosystem fund, hoping to launch some truly decentralized Web3 applications.

Currently, it appears that Hong Kong's financial sector, including the Securities and Futures Commission and the Monetary Authority, is driving regulations and oversight, making it seem more finance-oriented. However, projects focused on technological innovation do not require regulation, and entrepreneurs can come to Hong Kong to develop at any time. Additionally, as I mentioned, there are many relevant funds in Hong Kong that encourage more creative projects.

In fact, during the Hong Kong Carnival, I saw many technical teams coming to Hong Kong, and comparatively, Hong Kong remains their top choice. This is because Hong Kong is adjacent to Shenzhen and the entire Greater Bay Area, which has excellent technical teams and engineers. Furthermore, Hong Kong and Shenzhen are a financial center and a technology center, respectively. I believe that if we promote the development of Web3 projects across the nine cities in the Greater Bay Area, it would not be difficult to produce several leading technology companies.

11. ChainCatcher: Recently, the Hong Kong Monetary Authority published an article titled "Embracing Opportunities, Addressing Account Opening" discussing how the banking industry and some virtual asset-related institutions' "difficulties in opening accounts" will be further resolved. Besides the "account opening difficulties," what other urgent challenges do crypto enterprises currently face in Hong Kong?

Wu Jiezhuang: I actually attended this meeting, where the Hong Kong Monetary Authority and the Securities and Futures Commission gathered 20 banks and about 20 virtual asset participants to discuss the "account opening difficulties." This meeting clarified that banks have a consistent approach to all enterprises and will not set higher thresholds specifically for virtual asset platforms.

Aside from these issues, I am personally more concerned about human resources. As everyone comes to Hong Kong, there is a competition for talent, and talents with an international perspective, familiarity with legal regulations, and knowledge of Web3 are absolutely scarce. Therefore, I am also working hard to promote the Hong Kong government to support us in bringing more talent to Hong Kong, which is crucial. I roughly estimate that the Web3 industry in Hong Kong is lacking at least 50,000 to 100,000 people, as we hope to incubate 1,000 companies in the next three years, and with each company hiring dozens of people, that creates a gap of several thousand.

Additionally, in terms of funding, I am also working to promote more international venture capital institutions and funds to participate in the Web3 investment industry, making the entire ecosystem more closed-loop.