The Rise of Web3 Companies in Hong Kong

On April 12th, at the Web3 Hong Kong Carnival Summit held today, Chen Haolian, Acting Secretary for Financial Affairs and Treasury of the Hong Kong Special Administrative Region Government, stated that since the launch of relevant policies in Hong Kong last year, various types of Web3 companies, including virtual asset exchanges, virtual asset network security companies, virtual asset wallets, payment institutions, etc., have decided to establish their international headquarters or expand their scale in Hong Kong. Hong Kong will implement a licensing system for the virtual asset exchange in June this year, and has issued tokenized government green bonds in February this year.

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As the world experiences rapid technological advancements, the concept of Web3 companies has emerged as a new frontier in the digital landscape. On April 12th, at the Web3 Hong Kong Carnival Summit, Chen Haolian, Acting Secretary for Financial Affairs and Treasury of the Hong Kong Special Administrative Region Government, announced that Hong Kong has seen a surge in the establishment and expansion of Web3 companies since the launch of relevant policies in the region last year. This article examines the growth of Web3 companies in Hong Kong, the licensing system for virtual asset exchanges that will be implemented in June this year, and the tokenized government green bonds that were issued in February.

Understanding Web3 Companies

Web3 companies are decentralized blockchain-based entities that provide various services to users in a trustless, transparent, and secure manner. These companies have emerged as a key player in the Fourth Industrial Revolution that emphasizes the fusion of technologies, including the internet of things (IoT), artificial intelligence (AI), and blockchain, and the seamless integration of the physical and digital worlds.
Web3 companies are active in various fields such as virtual asset exchanges, network security companies, virtual asset wallets, and payment institutions. With their unique features such as decentralization, security, and transparency, they have garnered the attention of investors and entrepreneurs globally.

The Growth of Web3 Companies in Hong Kong

Since the launch of relevant policies in Hong Kong last year, the region has seen a surge in the establishment and expansion of Web3 companies. Various types of Web3 companies, including virtual asset exchanges, virtual asset network security companies, virtual asset wallets, payment institutions, etc., have decided to establish their international headquarters or expand their scale in Hong Kong.
The factors that have made Hong Kong an attractive destination for Web3 companies include its strategic location, legal and regulatory framework, favorable tax policies, and friendly business environment. Additionally, the Hong Kong government’s efforts to support fintech innovation have created a conducive environment for the growth of Web3 companies.

Licensing System for Virtual Asset Exchange

Hong Kong will be implementing a licensing system for virtual asset exchanges in June this year. The Securities and Futures Commission (SFC) has issued guidelines that require virtual asset exchanges operating in Hong Kong to be licensed or registered. The licensing regime aims to enhance the accountability, transparency, and security of virtual asset exchanges and protect the interests of investors.
The licensing system will regulate virtual asset exchanges’ activities such as management of client assets, due diligence on clients’ identities, anti-money laundering and counter-terrorist financing measures, and conflict-of-interest management. The licensing system will also allow the SFC to supervise and enforce compliance with regulatory requirements and penalize non-compliant exchanges.

Tokenized Government Green Bonds

In February this year, Hong Kong issued tokenized government green bonds, the first of their kind in the world, as part of its ongoing efforts to promote green finance. The tokenized bonds use blockchain technology to ensure transparency, security, and efficiency in the issuance and trading of bonds.
The tokenized government green bonds were issued on the Ethereum blockchain and are worth HKD 300 million. They were oversubscribed by 7.2 times, demonstrating strong investor interest in the application of blockchain technology to green finance.

Conclusion

Hong Kong’s support for fintech innovation and the favorable policies introduced by the government have made the region an attractive destination for Web3 companies. The licensing system for virtual asset exchanges that will be implemented in June this year will enhance the accountability, transparency, and security of virtual asset exchanges in Hong Kong. The tokenized government green bonds issued in February demonstrate how blockchain technology can be used to promote green finance sustainably. Hong Kong’s efforts to embrace blockchain and promote innovation in the fintech sector are poised to drive the growth of Web3 companies further.

FAQs

1. What are Web3 companies, and how are they different from traditional companies?
Web3 companies provide services on a blockchain platform, which eliminates intermediaries and provides transparency, security, and decentralization. Traditional companies cannot provide these features.
2. What is a licensing system for virtual asset exchange?
Hong Kong will be implementing a licensing system for virtual asset exchanges in June this year. The system will regulate activities such as management of client assets, due diligence on clients’ identities, anti-money laundering, and counter-terrorist financing measures, and conflict-of-interest management.
3. What are tokenized government green bonds?
Tokenized government green bonds use blockchain technology to issue and trade bonds. It promotes transparency, security, and efficiency in the issuance of bonds.