Hong Kong Seeks Global Input on Web3 and Virtual Asset Policies

• Hong Kong seeks global input to shape Web3 policies, aiming for robust regulations and international cooperation.
• Focus on AI and Web3 convergence to enhance regulation and support DAOs, fostering talent in Web3 technology and financial innovation.
• Plans for stablecoin regulation and custody services aim to boost investor confidence and market growth in Hong Kong’s virtual asset industry.

The Hong Kong Legislative Council is currently seeking global feedback on Web3 and virtual asset policies. Johnny NG Kit-Chong, a member of the Legislative Council, emphasised the need for opinions from the international industry to guide policy recommendations and discussions on Web3 and virtual asset development. This initiative aims to shape Hong Kong into a global hub for Web3 innovation.

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Key Areas of Focus

The Legislative Council’s subcommittee on Web3 and virtual asset development is looking into several critical aspects. These include balancing technical, legal, and regulatory frameworks to ensure clear and robust regulations. 

Additionally, the Council is interested in fostering international cooperation to position Hong Kong as a globally connected Web3 hub. This involves exploring the convergence of AI and Web3 technologies to enhance AI regulation and supporting the growth of Decentralised Autonomous Organizations (DAOs).

Moreover, the Council aims to develop strategies to attract and nurture talent in Web3 technology and financial innovation.

Enhancing the Virtual Asset Industry

In parallel to Web3 policies, the Legislative Council is also focusing on the virtual asset industry. It aims to identify measures to facilitate its growth in Hong Kong. This includes enhancing investor and consumer protection, boosting market confidence, and safeguarding virtual asset investors and consumers.

Furthermore, the Council plans to assess the potential benefits and risks of stablecoins, developing regulatory frameworks that balance financial stability with innovation. There is also a growing need for professional custody services for virtual assets, and the Council is developing corresponding regulatory measures to support this demand.

Government’s Proactive Approach

In July 2023, Hong Kong’s government formed a task force of 15 industry participants and 11 key government officials to oversee Web3 development and ensure its ethical promotion. 

However, there has been a decline in the number of crypto exchanges seeking operational licences in Hong Kong. Notably, IBTCEX and QuanXLab withdrew their applications on May 13, despite initially filing them in February 2024.

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