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Financial Secretary Paul Chan: In terms of financial development related to Web3 and virtual technologies, Hong Kong is at a golden new beginning

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Hong Kong welcomes the global fintech and virtual asset community and talent to Hong Kong and embraces the huge opportunities brought by the development of Web3 and virtual asset industries.

Original source: MarsBit

Following is the speech by the Financial Secretary, Mr Paul Chan, at the POW'd Web3 Innovators Summit today (January 9) :

Mr. Wang Feng (Marsbit Founder Wang Feng), Simon Chan Siu-ming, Chairman of Hong Kong Cyberport Management Company Limited, Peter Yam King-Xin, CEO of Hong Kong Cyberport Management Company Limited, Johnny Ng Ka-chuang, Chairman of Connors International Accelerator, Duncan Yau Dachan, President of Hong Kong Information Technology Federation, pioneers in the industry, Dear Friends:

Good morning! It's a great pleasure to be here today at the opening of the Web 3 Innovators Summit and to meet with so many of the pioneers in the field of fintech. Take this opportunity, I first wish all friends in the New Year good health, career, smooth work, happy life, career success!

I know that some of you are visiting Hong Kong for the first time in a few years. Some of you may have had doubts about Hong Kong's development in the past, but recently, I heard many of you speak highly of Hong Kong's new opportunities and potential for development. Your cutting-edge technologies, market sense and network of contacts are all your advantages on the road to entrepreneurship. I believe these advantages have attracted you to Hong Kong. I can tell you that the development of Hong Kong is at a new historical starting point, and the development of the Web3 ecosystem is also at a new stage. The combination of the two brings us together today to witness the golden new starting point of the development of Web3.

As Mr. Wang Feng said, Web3 is a decentralized Internet concept based on blockchain, supported by Distributed Ledger Technology (DLT), which can be effectively applied in multiple levels and links of the global financial market. In fact, many financial institutions are also exploring how to tokenize financial assets to improve efficiency and transparency; And actively trying to solve decades of efficiency and security problems in clearing, settlement and payment with new concepts and technologies.

In terms of financial development related to Web3 and virtual technologies, Hong Kong is at a golden new beginning. Allow me to make a brief statement.

First, Hong Kong is entering a new stage of "governance and prosperity". The new SAR Government is committed to promoting the combination of "viable government" and "efficient market". Under the policy of "grabbing enterprises" and "grabbing talents", in the past two months, many leading innovation enterprises and high-tech startups have actively contacted us, considering setting up international headquarters in Hong Kong or expanding their business scale in Hong Kong, and many are planning to go public in Hong Kong.

In fact, over the past few years, Hong Kong has developed rapidly in the fintech sector, making it one of the most dynamic fintech ecosystems in the region. The virtual capital industry in Hong Kong is also starting to develop steadily. The CSRC has granted two virtual exchange licences and the first virtual asset ETF was recently listed. We are confident that Hong Kong will soon develop a thriving ecosystem of virtual assets.

Second, Hong Kong's status as an international financial center. Hong Kong has been in the international financial market for decades and enjoys a good reputation. Our regulatory framework and system are linked to international rules and have been widely recognized by the international community, enabling fintech companies in Hong Kong to better use this platform to develop international business and explore cross-border cooperation.

Against this background, we dared to issue the Policy Declaration on the Development of Virtual Assets in Hong Kong in October last year, which we thought was an appropriate time to let global innovators in the virtual asset business know that Hong Kong embraces financial innovation and actively promotes the steady development of this market. Under the background of repeated explosion of virtual asset exchanges, Hong Kong has become the best foothold for high-quality virtual asset enterprises.

The nature of virtual assets and transactions has upended many traditional business models; But without proper regulation, the problem of so-called "free-riders" can seriously undermine the sustainability of an industry's development. In this regard, our vision is to provide appropriate and proportionate regulation of the market to unlock the potential of Web3 and other technologies to enhance efficiency and transparency at different stages and levels of economic, financial and other commercial activities for the benefit of the real economy, investors and citizens. In formulating regulatory details, we adopt the principle of "same activity, same risk, same regulation" to address actual and potential risks, so as to ensure that Web3 and virtual assets thrive without creating a risk gap in terms of financial stability, investor protection, and supervision of improper financial activities.

In terms of specific measures, we have recently completed the legislative work on a licensing regime for virtual asset service providers, which will be implemented in June this year. Under the new system, the requirements of virtual asset exchanges in anti-money laundering, anti-terrorism financing and investor protection are consistent with those currently applicable to traditional financial institutions, which will provide virtual asset exchanges with a certain degree of market recognition. Subject to regulatory conditions, financial intermediaries and banks will be able to work with licensed virtual asset exchanges when providing trading services to their clients. This combination of virtual and real provides new soil, brewing new models, new markets and new opportunities, and I believe it will also create a group of new winners.

Beyond regulation, governments and regulators are also conducting pilot projects to test the technological advantages of virtual assets and explore their further use in financial markets. Pilot projects include tokenizing government-issued green bonds for institutional investors to subscribe to and cross-border use of the central bank's digital currency, eHKD. While these projects are small steps, they demonstrate our commitment and determination to explore financial innovation with the global virtual asset community.

Distinguished guests and friends, we invite the global virtual asset industry to join us in tapping into the potential of financial innovation through the Hong Kong International Financial Centre's regulatory framework, which is clear, clear, relevant and in line with the best international standards and practices. We also welcome the global fintech and virtual assets community and talent to join us in Hong Kong to embrace the huge opportunities brought by the development of Web3 and virtual assets industry.

In conclusion, I wish the summit a complete success. Thank you very much.