2024 is destined to be extraordinary. After three years of dormancy, Web3 has finally ushered in the beginning of a new bull market cycle. New cycle, new narrative - what fresh blood is pulsating beneath the surface? Let us turn our attention to Hong Kong, the Asian financial center and the 'heart' of Asia's Web3.
Over the course of a year, the trio of regulation, innovation, and capital has surged forward, allowing the entire industry to find a delicate balance between innovation and regulation.
The new narrative is complex and ever-evolving, with hot topics emerging one after another. This article will review the top ten buzzwords in Hong Kong's Web3 sector for 2024, providing insight into the industry's rise and development throughout the year.
1. Native Compliance - 'No wild paths, just clarify the path'
In 2024, the whole world is focusing on Web3 compliance; the era of 'regulatory arbitrage' is gone for good.
Unlike the 'open first and amend later' approach taken by the U.S. and other regions, Hong Kong has blazed a new trail of 'rules first, innovation follows'. From VASP, CBDC, and HKD stablecoins to virtual asset spot ETFs and Ensemble Sandbox plans, each piece of legislation and every pilot program represents a phased achievement of Hong Kong regulatory authorities working collaboratively with local financial institutions.
More importantly, the long-cautious Hong Kong regulators completely 'shifted gears' in 2024. Whether it was the SFC issuing four VASP licenses in December or the world's first ETH spot ETF launch, this 'steady yet fast' pace indicates that Hong Kong regulation has achieved a good balance between caution and openness.
If Web3 is a game, then Hong Kong in 2024 not only sets the upgrade path but also compiles a 'newbie guide' for the upcoming new players.
2. BTC Asset Allocation - 'Countries and enterprises compete to stockpile coins'
What virtual assets to invest in 2024? BTC, which has seen a 150% increase throughout the year, must be one of the answers. In the second half of 2024, the U.S. will take the lead in initiating a coin stockpiling competition, with Trump's BTC strategic reserve plan directly upgrading bitcoin to a 'national strategic material', prompting countries like Brazil, Poland, and Japan to follow suit.
With policies set, the capital market is quickly following suit. Throughout 2024, institutional investors purchased a total of 859,454 BTC, with long-term BTC investor MicroStrategy leading the way, increasing its holdings by nearly 250,000 BTC this year, earning a staggering $20 billion and solidifying its position as a BTC whale.
The world is witnessing a 'coin stockpiling wave', and enterprises are not falling behind. Hong Kong-listed company Boya Interactive (HK.0403) directly announced it holds 2,641 bitcoins and 15,445 ethers, quickly exchanging 14,200 ethers for 515 bitcoins, a seamless operation; Nano Labs (Nasdaq: NA) partnered with HashKey Exchange, investing $50 million to build BTC assets.
As of the time of writing, Nano Labs has already held BTC worth $5.5 million, with the company's stockpiling of coins being executed flawlessly. Additionally, it is reported that companies like Guofu Innovation and Coolpad Group are also quietly following suit, strategically positioning themselves in the bitcoin reserve battlefield.
3. Virtual Asset Spot ETF - 'Old tools, new plays'
ETFs are already commonplace in the traditional financial market, but when they merge with virtual assets, they become the breakthrough tool for the Web3 market in 2024. In January 2024, the U.S. approved its first BTC spot ETF, sparking market excitement.
While other countries may remain cautious or begin to consider, Hong Kong has responded swiftly, not only launching BTC spot ETFs but also being the first to introduce ETH spot ETFs, establishing a position in the Asian market.
Currently, the Hong Kong market has three BTC spot ETFs and three ETH spot ETFs, launched by top institutions such as Huaxia, Harvest, and Bosera. According to Coinglass data, as of the time of writing, the total net asset value of Hong Kong's BTC spot ETFs reached $439 million, while the net value of ETH spot ETFs was $63.56 million.
Although there is still a distance in scale compared to the U.S., Hong Kong's virtual asset spot ETFs have quickly begun to position themselves in the market with their innovation and dynamism, paving the way for subsequent capital inflows.
As a result, in July, Hong Kong welcomed Asia's first bitcoin inverse product - CSOP Bitcoin Futures Daily (-1x) inverse product. In November, the Hong Kong Stock Exchange launched a virtual asset index series, including reference indices and exchange rates for BTC and ETH, bringing more financial instruments to the virtual asset market.
Virtual asset spot ETFs have not only opened the door to Hong Kong's traditional financial market but also serve as the starting point for Hong Kong's Web3 capital surge.
4. Stablecoins - 'Top-tier influencers in cross-border payments, the 'darling' of regulation'
Mainstream stablecoins such as USDT and USDC, backed by a 1:1 peg to the US dollar, have long been the 'top influencers' in the cross-border payment field. Whether in crypto trading, payroll settlements, or product payments, stablecoins are omnipresent. However, with fame comes controversy; multiple depegging risks have made them a focal point for global regulatory scrutiny.
In June 2024, the EU's (Stablecoin Act) will take effect, instantly opening the door to global regulation. Hong Kong has taken the lead, starting strong at the beginning of the year: in February, it released regulatory consultations for fiat-backed stablecoins, in March it launched the 'Stablecoin Sandbox' plan, in July it issued a consultation summary, and in December it directly introduced the (Stablecoin Act)... The Legislative Council's KPI arrangements are clear.
Interestingly, the first batch of sandbox players includes well-known companies such as JD Coin Chain Technology, Yuan Coin Innovation Technology, Standard Chartered Bank (Hong Kong), Animoca Brands, and Hong Kong Telecom (HKT), instantly turning the stablecoin sandbox into a 'top-tier club'.
Currently, Hong Kong's regulatory focus is temporarily placed on HKD stablecoins, but this move has stabilized the market, elevating Hong Kong's digital asset regulations to a new level. As for global favorites like USDT and USDC, will Hong Kong consider allowing them? The story continues.
5. VASP License - 'Only dare to open with a license'
Navigating the virtual asset trading market, the VASP (Virtual Asset Service Provider) license is the 'entry ticket'. With the U.S. and Singapore leading the way, followed by Dubai and the EU, holding a license has become the mainstream trend. As an Asian financial center, the Hong Kong VASP license is also ready.
Currently, the number of licensed platforms in Hong Kong has grown to seven, including HashKey Exchange, OSL Exchange, HKVAX, HKbitEX, Accumulus, DFXLabs, and EX.IO. These 'good students' not only strictly adhere to the compliance requirements of the Anti-Money Laundering Ordinance (AMLO) but have also passed multiple reviews from the Hong Kong Securities and Futures Commission (SFC).
Efforts lead to rewards. Licensed positions are more favored by the market. For instance, HashKey Exchange saw its overall platform assets surpass HKD 10 billion in 2024, with a cumulative trading volume of HKD 580 billion, ranking among the top 10 centralized exchanges globally. While more platforms await review, the Hong Kong SFC has already formulated a clear licensing procedure roadmap. In 2025, more platforms are expected to enter the market with licenses.
6. PayFi - 'Is it old wine in new bottles, or a new wave of payment revolution?'
In 2024, PayFi (Payment Finance) has become a new favorite in the Web3 circle. It may seem like just moving payments onto the blockchain, but in reality, PayFi greatly enhances the efficiency of cross-border payments, instantly upgrading traditional 'slow remittances' to 'instant arrivals'.
If there is one universally recognized and enduring mainstream narrative in the Web3 industry, it is undoubtedly the key proposition of Mass Adoption, with PayFi being an important practitioner of this narrative.
Broadly speaking, PayFi belongs to the RWA track, but its ambitions extend far beyond that, driven by blockchain's leverage over vast amounts of real-world assets - in the payment sector alone, the total scale of segmented markets such as credit cards, trade finance, and cross-border payments exceeds $40 trillion. Currently, PayFi is only focusing on the 'long tail market' of traditional finance, presenting enormous potential.
The core value of PayFi lies in connecting blockchain capital pools with off-chain financial needs. This connection is not easy and requires the integration of multiple forces: first, operations must be conducted in a relatively loose regulatory environment and within crypto-friendly cities; secondly, there are not many institutions with the financial strength to provide full-chain compliance support from infrastructure to KYC, deposit and withdrawal, and liquidity management. Only a few licensed regulatory institutions have this capability, such as Hong Kong's largest licensed virtual asset exchange, HashKey Exchange.
Hong Kong may become the 'financial hot land' for PayFi. As one of the global financial centers, Hong Kong possesses substantial cross-border funding needs, mature financial infrastructure, and supportive policies like the 'Ensemble' plan and stablecoin regulation, continuously laying out the red carpet for the industry to establish operations in Hong Kong.
7. Traditional institutions rushing in - 'Old money turns into new nobility'
Although virtual asset spot ETFs have provided traditional capital with a way into the Web3 space, indirect investment is not as 'sweet' as direct profits. Looking at the early crypto bull market, traditional financial giants in the U.S. made a fortune by issuing BTC spot ETFs, while Hong Kong brokers, despite having millions of users, are still stuck in a stock market that resembles winter - with daily trading volumes of over 10,000 Hong Kong stocks often falling below HKD 10,000.
With ideas opening up, why not get users involved in Web3? Thus, traditional brokers in Hong Kong have finally 'rushed in'. Traditional brokers like Victory Securities and Adept Securities, as well as internet brokers like Futu and Tiger Brokers, and even foreign giants like Interactive Brokers, have all obtained the Hong Kong SFC's first license upgrade, quickly setting up virtual asset businesses.
To 'take fewer detours', they chose to partner with the locally licensed exchange HashKey Exchange, integrating HashKey Pro's institutional-level comprehensive services to quickly launch the deposit, withdrawal, and trading functions for virtual assets like BTC and ETH. In just a few months, they achieved a trading volume of HKD 5 billion.
The involvement of brokers not only brings traffic but also incorporates their professional advantages into Web3 - risk control, compliance, and established customer relationships can quickly pull traditional stock investors into the world of virtual assets. The most exciting aspect is that if the Web3 market continues to break through in 2025, Hong Kong brokers, leveraging their inherent advantages, might even bring global 'old money' investors into the market, fully linking traditional finance with the virtual asset market.
8. OTC Regulation - A $10 billion market may soon face restrictions.
'Deposits and withdrawals, go to Hong Kong', with hundreds of offline exchange shops attracting more people, especially for those institutions and high-net-worth users making millions in transactions. OTC trading is not only flexible but also offers higher privacy and liquidity.
As a result, the Hong Kong OTC market has always been vibrant. According to statistics, there are about 200 offline OTC trading shops and 250 active online service providers in Hong Kong, with an annual trading volume reaching nearly $10 billion.
Beneath the prosperity, undercurrents are surging. In recent years, multiple OTC robbery incidents and the JPEX incident involving false promotions by OTC promoters have revealed the compliance shortcomings and potential money laundering risks of the OTC market.
In response, the Hong Kong government quickly 'made up for lessons learned', releasing (OTC trading regulation proposals) in February, planning to impose restrictions on the OTC market. According to the latest news, the regulatory plan will undergo consultation and legislation in 2025/2026, with customs and the SFC closely cooperating on the project.
Industry opinions are polarized - Some worry that short-term regulations will cool the market, while others are optimistic about the long-term trust dividends brought by regulation. After all, without a 'license', the market is just 'free-range'. With regulation, Hong Kong's OTC market can grow from a 'wild kingdom' into a compliant center of global capital trust, welcoming greater growth.
9. Conference Running - 'Public fitness project'
Conferences have always been a 'national sport' in Web3, and Hong Kong is the hub of this year's activities. In 2024 alone, there will be no less than 50 mid-to-large scale events in Hong Kong, ranging from discussions on virtual asset regulations to practical blockchain technology implementations, from coding surfing by tech geeks to strategic dialogues by business leaders. Web3 themes cover a wide array of topics.
Large summits such as WOW Summit, FORESIGHT 2024, Hong Kong Web3 Carnival, and FinTech Week; technology forums like Solana Hacker House HK and HashKey Hackerhouse; not to mention numerous small salons and cocktail parties...
The most typical example is the Hong Kong Web3 Carnival, which spans nearly 9,000 square meters, lasts four days, and includes nearly 200 surrounding activities in addition to the main venue. Rough estimates suggest that over 50,000 people participated offline, attracting more than 300 globally renowned speakers and over 100 popular projects. In February 2025, the Consensus will also be held in Hong Kong for the first time, followed by the new edition of the Web3 Carnival in April.
The industry is nonstop, and conferences are unceasing; 2025 will continue to be hot.
10. Front shop and back factory - 'Deep-Hong Kong combination, a new landscape for Web3'
The stage of 2024 sees the Chinese Web3 center shifting from previously prominent cities like Shanghai and Hangzhou to Hong Kong, while the 'front shop and back factory' model is a unique collaboration skill between Hong Kong and Shenzhen. This combination not only capitalizes on industry advantages but also creates a distinctive strategy unique to the Greater Bay Area.
'Front shop' is a strength of Hong Kong. As one of the world's leading international financial centers, Hong Kong possesses an efficient capital market, an open business environment, and continuously improved virtual asset regulatory policies. From the influx of international industry activities to localized and clear policy guidance, along with strong policy support such as the HKD 10 billion innovation and technology guiding fund and special visa programs, as well as a high-quality financing environment, establishing operations in Hong Kong means positioning oneself at the center of the global market.
In contrast, Shenzhen's 'back factory' has the killer advantage of strong R&D capabilities, a complete industrial chain, and extreme cost control, providing an ideal environment for the incubation of Web3 projects. Therefore, many Hong Kong Web3 companies prefer to deploy their technical teams in Shenzhen, enabling rapid trial-and-error and implementation in blockchain underlying technology development, hardware production, and certain operational aspects. In 2024, Hong Kong's Cyberport has also strengthened cooperation with multiple technology parks in Shenzhen, facilitating smoother resource flow between Hong Kong and Shenzhen.
This 'front store and back factory' model forms a closed loop of 'brand + technology', helping Web3 companies unleash great potential and enter the global market. In 2025, Hong Kong holds great promise!
2025 Hong Kong Web3 Carnival event preview
The Hong Kong Web3 Carnival is a Web3 event brand jointly launched by Wanxiang Blockchain Lab and HashKey Group, hosted by W3ME. The 2025 Hong Kong Web3 Carnival will be held from April 6 to 9, 2025, at the BCDE Hall on the 5th floor of the Hong Kong Convention and Exhibition Centre. This event will last four days and will include four venues, covering over 14,000 square meters.
The previously held 2023 Hong Kong Web3 Carnival and 2024 Hong Kong Web3 Carnival gathered more than 250 cutting-edge exhibition projects and invited over 800 industry leaders for in-depth exchanges, attracting over 80,000 on-site visitors while hosting more than 300 colorful surrounding activities.
The Financial Secretary of the Government of the Hong Kong Special Administrative Region, Paul Chan, Ethereum co-founder Vitalik Buterin, and ARK Invest CEO and CIO Cathie Wood have all served as guest speakers at the event.
As the third consecutive event, based on the reputation and global influence accumulated from the previous two events, the scale of the 2025 Hong Kong Web3 Carnival is expected to reach tens of thousands of participants. It will continue to gather global elites and cutting-edge projects in the Web3 field to explore the infinite possibilities of Web3 technology, offering an unprecedented technological feast for global attendees. So what are you waiting for? Come join us!
Ticket discounts
As the official partnering community for the 2025 Hong Kong Web3 Carnival, the IC Chinese community offers an exclusive 15% discount on tickets, discount code: ICCHINA.
Ticket purchase link:
https://lu.ma/hkweb3festival_2025?coupon=ICCHINA
Visit the ticket purchase link above to enjoy exclusive ticket discounts. Ticket prices have risen from the previous $199 and $299 to the current $399, and prices will increase further. Friends who are sure about attending should buy tickets early!
For more related information, please read:
Global cryptocurrency companies are turning to Hong Kong for refuge and opportunities.
The 2025 Hong Kong Web3 Carnival is scheduled to grandly take place in April next year.
Contact channels
Official event website:
web3festival.org/hongkong2025
X:
@festival_web3
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