Original title: The effectiveness of Hong Kong’s Web3 policy from the perspective of the development status of compliant exchanges
Original link: https://www.ftchinese.com/story/001102060
He Yizhi: The rapid growth of Web3 companies represented by Hashkey has given the industry a new understanding of the "Hong Kong Web3 speed". This achievement is an affirmation of Hong Kong's innovative breakthroughs in its financial center development strategy.
In January 2024, at the 17th Asian Financial Forum (AFF), Hong Kong Chief Executive John Lee stated: "The Hong Kong SAR Government is committed to developing green finance and the Web3 ecosystem and seizing development opportunities." This is more than a year since the Hong Kong government officially released its local crypto asset development policy declaration in October 2022. This is the second time that the Hong Kong government has emphasized the important strategic role of Web3 development in the construction and development of Hong Kong's financial center at an important international financial event.
Before the regulatory environment became strict in 2019, Hong Kong was the headquarters of influential cryptocurrency exchanges such as BitMEX, FTX and Crypto.com, and was also one of the world's largest cryptocurrency OTC centers. After experiencing the adjustment of the last round of bull market bubble, the Hong Kong government has become more aware that the development of Web3 must be based on compliance and licensing. Only under the premise of establishing a regulatory system and risk management system through technology can the entire industry have a sustainable future.
As the largest licensed virtual asset exchange in Hong Kong, the development history of HashKey Exchange can be said to have witnessed the ups and downs of Hong Kong as the center of the Asian virtual asset and Web3 industry. Hashkey was founded in 2018. Although most of the compliant exchanges developed at the same time as Hashkey are still exploring development models under the premise of compliance, most of them are still in the stage of "popular but not popular", because compliant exchanges cannot provide a large number of cryptocurrency transactions in the short term, nor can they provide derivative transactions such as contracts and leverage, which will inevitably lead to their lagging behind other crypto exchanges in terms of trading volume and revenue. For example, Coinbase, a licensed US exchange founded in 2012, suffered a net loss of US$30 million in 2019, and it was not until 2020 that it began to truly turn losses into profits. It can be seen that it is not easy to develop this track. At the end of 2022, the Hong Kong government's policy declaration on Web3 announced that Hong Kong will lead the development of a new round of compliant tracks, and Hashkey has entered the fast lane of development.
At the just-concluded 17th Asian Financial Forum, HashKey Exchange CEO Livio Weng said: "After nearly half a year of stable operation, the platform's total transaction volume has exceeded HK$320 billion, and will achieve positive cash flow in January. This is the first time that Hashkey has achieved positive monthly cash flow since it obtained its license, and it is expected to achieve 3 to 6 times growth this year." The rapid growth of Web3 companies represented by Hashkey has given the industry a new understanding of the "Hong Kong Web3 speed." This performance is an affirmation of Hong Kong's financial center development strategy of using Web3 as a path for innovative breakthroughs in recent years.
In recent years, the Hong Kong government has not only provided policy and financial support to Web3 enterprises, but more importantly, it has helped enterprises actively explore the "landing development" and ensure that the interests of crypto project parties, regulators, platforms and users can be balanced and protected under the premise of sound compliance and clear paths. In the "Genesis VIP" event launched by HashKey Exchange in January this year, the first batch of transactions reached 38.8 times the total sales volume, exceeding US$40 million. This business model is also something that many US compliant platforms cannot do, such as Coinbase, which was just mentioned, and cannot launch its own platform currency and equity sales activities. This is exactly the "speed" brought by Hong Kong's pragmatic strategy in promoting the landing and development of Web3.
While keeping the bottom line of financial risks such as anti-money laundering (AML) and counter-terrorism financing (CFS), the Hong Kong government has effectively brought together the public and private sectors to explore the application of cryptocurrency technology. In the United States, this coordination is often resisted by different parties, which limits the development of compliant enterprises. For example, there are continued disagreements on whether issuing tokens and smart contracts is free speech, whether decentralized financial protocols have the same compliance obligations as traditional financial service providers, or which tokens are securities and which are commodities. Regulatory clarity is still missing. Therefore, HashKey Exchange's ability to achieve positive cash flow in such a short period of time can also be said to be a "typical success story" of the rapid development of Web3 in Hong Kong.
In the future, if Hong Kong wants to continue to build a Web3 center, it needs to embrace the characteristics of global users to a greater extent, accelerate the exploration and implementation of BTC spot ETF, RWA, and STO, and launch differentiated assets in Hong Kong that are different from other markets. If the introduction and establishment of a series of policies and compliance systems in 2023 represents the beginning of the "first year" of global crypto compliance, then whether the industry can truly break through this year requires continued attention to the development of Hong Kong's Web3 and the continued performance of representative market institutions such as HashKey Exchange.