The Trend of Web3 Regulation is Inevitable, Hong Kong Shows Its Eastern Characteristics

Recently, the Hong Kong virtual asset trading platform's withdrawal policy has officially been implemented, sparking widespread discussion in the market. Some voices believe this marks the end of the Web3 era in Hong Kong, but the reality is quite different. From a global perspective, Hong Kong's position as an Eastern Web3 hub has only just begun to emerge.

Global Web3 Regulatory Trends

Looking at the major Web3 financial markets globally, it is not difficult to see that regulation is gradually becoming more refined. Japan, as a pioneer, introduced a licensing system for cryptocurrency exchanges as early as 2017. As of today, Japan has 23 approved exchanges, most of which are local companies.

Singapore and the United States strengthened regulation after the upheaval in the cryptocurrency industry in 2022. It is worth noting that these regions were once heavily criticized for strict regulation, but as policies continue to improve, their Web3 ecosystems are becoming increasingly vibrant. The recent FIT21 Act released by the United States provides a new framework for the definition and classification of digital assets.

From a global perspective, whether actively embracing or passively responding, countries are ultimately moving towards precise regulation. According to licensed data from exchanges, local companies are often favored by regulators, and the proportion of offshore exchanges generally does not exceed 30%.

Hong Kong's Regulatory Path

Compared to the "first develop, then regulate" model in the United States, Hong Kong has adopted the "first obtain a license, then develop" approach. This method directly skips the phase of unregulated growth and reflects Hong Kong's forward-looking layout for the Web3 industry.

Since the relevant policies were established in 2022, Hong Kong has laid a foundation for the comprehensive compliance of the Web3 industry. Currently, more than half of the applicants retain their qualifications, and approved exchanges such as HashKey Exchange have also shown a positive development trend.

It is worth emphasizing that Hong Kong has successfully addressed the regulatory challenge of exchanges, which have the highest concentration of funds and are the most complex. This marks a key step for Hong Kong in terms of comprehensive regulation in Web3.

The Role of Hong Kong in the East-West Game

In the Web3 era, traditional monopolistic regulation is no longer applicable. In the future, governments need to attract capital and talent through friendly policies. Hong Kong, as the Eastern Web3 stronghold, will engage in a game of strategy with Western countries like the United States, jointly leading the direction of global Web3 development.

The recent shift in the American political stance towards cryptocurrencies is a clear signal. Hong Kong's first-mover advantage in areas such as ETH ETFs may also accelerate the approval process in the United States. In the future, ETH ETFs with staking features could become a new focal point of competition.

Unique Advantages of Hong Kong

Hong Kong has released a series of detailed guidance documents regarding Web3 regulation, which are clearer and more mature than the regulatory framework in the United States. With the development of the industry, Hong Kong is expected to attract more Web3 talent and capital from the mainland and overseas.

Hong Kong is advancing the integration of Web3 and traditional finance from multiple dimensions. From the potential opening of STOs and RWA investments to retail investors, to the regulatory framework for HKD stablecoins and over-the-counter (OTC) virtual asset stores, Hong Kong is comprehensively laying out the Web3 ecosystem.

Conclusion

In the foreseeable future, licensed exchanges will become the cornerstone of Hong Kong's Web3 ecosystem. In addition to trading activities, these platforms will also play a key role in various areas such as ETF custody, RWA, STO, and OTC, promoting the comprehensive development of Hong Kong's Web3 industry.

Although the withdrawal of some exchanges from the Hong Kong market has raised some concerns, in the long run, this is just a necessary stage in the development of Web3 in Hong Kong. With the continuous improvement of the regulatory framework and the gradual maturation of the market, Hong Kong is expected to gain a unique advantage in the global Web3 competition and become an important hub connecting the East and West.