Since the release of the policy declaration on the development of virtual assets in Hong Kong at the end of 2022, Hong Kong has always been the focus of the Web3 world. When Hong Kong government officials frequently show up to encourage the innovative development of Web3, when tens of thousands of Web3 Builders gather in Hong Kong again after three years, when traditional institutions and native Web3 companies communicate equally in the same context, we not only see the Hong Kong government The sincerity in developing Web3 also shows that Web3 is really becoming popular in Hong Kong.
Hong Kong in April belongs to Web3, but will the promised land of Web3 really be Hong Kong? This is a question left for every Web3 Builder to think about after the excitement.
What can Hong Kong bring to Web3?
In 1960, John F. Kennedy, describing the Second Industrial Revolution, described automation as “a revolution with the dark threat of industrial dislocation, increased unemployment, and deepening poverty. But it is also a revolution full of hope. , bringing new prosperity to workers and new wealth to the country." Web3 is also an innovative change that requires long-term optimism and hope.
But reality is not friendly to Web3. Since the second half of 2022, U.S. regulators have been adopting a continued high-pressure stance against many crypto institutions, including Coinbase, Binance, and TRON. The collapse of many crypto-friendly banks has further compressed the development space of Web3; it was previously regarded as crypto The attitude of Singapore, the Holy Land, has also taken a sharp turn recently. In this process, Web3 practitioners have become more aware of the importance of regulatory compliance, but they also urgently need to find the next land suitable for Web3 innovation. Now, Hong Kong has seized the opportunity.
For Web3, in addition to its own endogenous evolution mechanism, external factors such as policies, talents, traffic, and funds are all necessary for development. Among them, funds and traffic have the most direct role in promoting Web3 at this stage.
The first is traffic. The reason Web3 needs attention is because it is being paid attention to by more and more people. Only by continuously attracting external attention can positive feedback for innovation be formed. Whether it is favorable policies or high-frequency activities, Web3 has gained unprecedented attention in Hong Kong and even Greater China in the past period. At the same time, Hong Kong is attracting and accepting global Web3 Builders and their innovations with sufficient tolerance and openness, and creating a platform for them to promote their ideas and communicate freely. This is very important for Web3 which is not yet mature. The contention of a hundred schools of thought during the Spring and Autumn Period and the Warring States Period laid the cultural foundation of China's feudal society for more than two thousand years. We believe that Web3 also needs to go through a similar stage to find its true development foundation.
During the Hong Kong Carnival, we seem to be seeing the prototype of the "Web3 Contest of a Hundred Schools": Builders with different backgrounds and different tracks are tirelessly exporting to the outside world over and over again their understanding of Web3 and the "great cause" they are involved in. The Web3 they explained may not be comprehensive, and may even be falsified one day in the future, but on those occasions and at those moments, we must still applaud them sincerely. Gods are not necessarily respectable, but every ordinary person on the road to becoming a god is respectable.
Second is funding. We always hope that killer applications will be born in the field of Web3 and blockchain. However, after experiencing the black swan in 2022 and the tightening of global regulations in 2023, many people realize that liquidity issues are the bigger problem facing Web3 at this stage. Web3 innovation is moving from pure traffic thinking to a stage where traffic thinking and liquidity thinking are parallel, and even liquidity thinking is more important. The core of liquidity is capital.
Grand narrative aside, high-frequency Web3 activities may not bring a large number of Web2 users directly into Web3, but they will certainly allow more Web2 funds to pay attention to and support Web3. On various occasions in Hong Kong last week, we frequently saw the presence of Web2 capital and institutions. They are showing great interest in Web3 and will inject more liquidity into this area. At the same time, favorable policies have also allowed more Hong Kong financial institutions to send friendly signals to Web3. They are actively connecting virtual asset custody and deposit and withdrawal businesses. If Hong Kong financial institutions can open up legal currency deposit channels, they will undoubtedly attract Web3-friendly funds from both sides of Hong Kong and the world.
In addition, Hong Kong's unique location advantage will also make it a gathering place for Eastern and Western Web3 innovation: international Web3 projects will use Hong Kong as a window to experience and try to reach the Chinese market in a compliant manner. China's local Web3 innovation can also be Hong Kong can serve as a springboard to better try internationalization.
All of the above, coupled with the Hong Kong government’s supportive policies and abundant human resources, Hong Kong now has various elements for the development of Web3.
However, whether Hong Kong can become a suitable place for Web3 still depends to a large extent on what Hong Kong wants to gain from the development of Web3. Hong Kong supports Web3 because it sees the huge potential of Web3. However, if Web3 seriously deviates from development expectations, or fails to create the value expected by the Hong Kong government, or even creates uncontrollable risks, no one can guarantee that policy preferences will not change. For Web3 practitioners, it is important to understand the core demands of developing Web3 in Hong Kong as soon as possible. Only in this way can we take root in Hong Kong and build Hong Kong into a real hot spot for Web3.
And if the digital nomads in the Web3 world only regard Hong Kong as a transit island for temporary hibernation rather than a habitat for long-term reproduction, then please enjoy the current carnival in Hong Kong.
What are the core demands of Hong Kong’s development of Web3?
As a highly open and outward-oriented economy, Hong Kong has experienced three industrial transformations since the 1950s. During this process, traditional manufacturing has been basically moved out of Hong Kong, and the service industry has gradually become Hong Kong's pillar industry. Today, the service industry accounts for as much as 90% of Hong Kong's economy, but it is still concentrated in traditional financial and trade, shipping and logistics, tourism, exhibitions and other fields. This asset-light model shaped Hong Kong’s past glory. However, under the global new economic development trend, the traditional and single-solid industrial structure has long been unable to meet Hong Kong’s development needs, becoming what some experts call Hong Kong’s “resource curse.”
Optimizing the industrial structure and accelerating industrial upgrading have become difficult problems facing Hong Kong. Hong Kong has tried to redevelop its manufacturing industry, but with little success. The fundamental reason is that the physical costs of land and manpower in Hong Kong are too high, and high-end manufacturing with higher technological content is a blank slate in Hong Kong. It has become Hong Kong’s choice to develop financial technology innovation industries such as Web3 and embrace a broader digital space.
On the other hand, during the global wave of Internet entrepreneurship in the past two decades, Hong Kong has carried the liquidity needs of a large number of technology companies, but their business focus is often not in Hong Kong. Hong Kong has not enjoyed the benefits brought by Internet technology innovation. Dividends of the times. To a certain extent, Hong Kong actually missed the first wave of opportunities for Internet technological innovation and also lost an important period of time for economic upgrading and industrial transformation. This has led to the loss of Hong Kong's local labor force in recent years, Hong Kong's capital outflow tendency, and its international center status has also been affected: the Global Financial Center Index (GFCI) ranking shows that Singapore has surpassed Hong Kong and risen to third place in the world.
Now, after experiencing social pain and the impact of the epidemic, Hong Kong not only wants to continue its advantages in the financial services industry, but also wants to make up for its lost time in the field of Internet technology innovation, while consolidating its status as a global financial center and building Hong Kong into a Become an international innovation and technology center.
According to Hong Kong Financial Secretary Paul Chan, "technological innovation" is not a multiple-choice question for Hong Kong today, but a must-answer question. After missing the golden development period of Internet technology, Hong Kong must catch up and develop technological innovation in the Web3 industry. Liang Hanjing, head of financial technology at Invest Hong Kong, also said in an interview with the media that although Hong Kong is an international financial center now, no one can guarantee what it will be like in 10 years. Hong Kong's economy cannot rely on a single sector alone and urgently needs to find new growth points. Web3 represents a paradigm shift that will change the way we interact with information, value, and trust on the Internet or metaverse, and may even enable more decentralized, efficient, and inclusive platforms and services that empower users and creators. Power will also create new opportunities for innovation, entrepreneurship and social impact. From the expressions of these Hong Kong government officials, it is not difficult to see Hong Kong’s expectations for Web3 innovation.
As the next generation of the Internet, Web3 is not only a technological revolution that brings together many cutting-edge digital innovations, but also a financial revolution with virtual assets as its core object. Although there have been many risks in the virtual asset market before, the Hong Kong government has not ignored the intrinsic value of virtual assets and the benefits brought by the blockchain technology behind it. Hong Kong has regarded virtual assets as an important part of the Web3 ecosystem. Hong Kong's recently released "ETFs and the Development of the Virtual Asset Ecosystem in Global Financial Markets" points out that virtual assets are becoming an important global asset type and will have an increasingly important impact on the future development of the financial system.
The development of Web3 and virtual assets in Hong Kong is not only pragmatic, but also pragmatic: the Hong Kong government is more concerned about technological innovation and application innovation that can have a substantial impact on the economy and society. Chen Maobo pointed out at the Financial Technology Forum that the success of the application of financial technology, virtual assets or Web3 in the financial field depends on whether new technologies, models and applications can truly meet the needs of the real economy, create value for citizens, and even make the entire society useful. Proceeds. Indeed, all policy support and infrastructure construction ultimately need to be implemented in actual applications - only application innovation can help Web3 break through the circle and reach ordinary users, and only the prosperity of the application layer can reflect the long-term value of Web3. In the next 15 years, Web3 applications built on blockchain infrastructure will become the new focus of development and have a revolutionary impact on human economic and financial activities, social interaction, and privacy protection in the digital world.
In the field of virtual assets, Hong Kong will not repeat the development trajectory of the currency circle. Its key development will still be the CeFi track, of which regulated virtual asset trading and custody businesses, as well as digital Hong Kong dollars and stable coins will be the next stage. focus and development direction. DeFi, which is more decentralized and more difficult to regulate, may not be within Hong Kong's goals in the short term.
Conclusion
The narrow terrain and lack of resources have limited Hong Kong's imagination in physical space, but they have forced it to nurture a highly resilient civilian spirit and business culture. This trait perfectly fits with the contractual spirit of modern society and provides opportunities for the development of Hong Kong's financial industry. good soil. In the subsequent transformations, as a place where Eastern and Western cultures blend, Hong Kong has always acted as a lubricant between mainland China and the world with its soft body and flexible mechanism. In the past 20 years, Hong Kong has become the freest economy in the world, and The most internationally renowned and influential Chinese city.
Now facing the new wave of technology and financial changes that may be triggered by Web3, Hong Kong has taken the lead. But whether Hong Kong will become the promised land of Web3 will depend on the actual fit between Web3 development and Hong Kong's needs. However, the two-way choice between Hong Kong and Web3 is still in a sweet period, and it will take time to answer whether it is truly suitable.
