Hong Kong Web3 Policy Timeline in 2023

Organization: Songxue, Golden Finance

In 2023, Hong Kong introduced a series of policies that are beneficial to the development of the web3 industry. Golden Finance compiled Hong Kong’s web3 related actions as follows.

On January 31, the Hong Kong Monetary Authority announced the conclusions of talks on cryptoassets and stablecoins. It stated that when finalizing specific regulatory arrangements, it will take into account the opinions collected, the latest developments in the market and international discussions, and maintain communication with stakeholders and market participants, with the hope of implementing regulatory arrangements in 2023/24.

On February 16, the Hong Kong SAR government announced the successful sale of HK$800 million in tokenized green bonds (tokenized green bonds). The Central Monetary Unit for Debt Instruments (CMU) of the Hong Kong Monetary Authority is the settlement and settlement system for this bond, and the platform is Goldman Sachs’ tokenization platform GSDAPT.

On February 20, the Hong Kong Securities and Futures Commission stated in a consultation document that it will allow individual investors to trade large-market tokens on exchanges licensed by the Securities and Futures Commission, subject to knowledge tests and risk tolerance assessments. and reasonable risk exposure limits are in place. Bitcoin and ethereum, the two largest digital assets by market capitalization, may be listed on trading platforms in Hong Kong, a spokesman for the Securities and Futures Commission said in a briefing.

On February 22, when delivering the 2023-2024 SAR government budget, Financial Secretary Paul Chan Mo-po of the Hong Kong SAR government stated that Cyberport had established a Web3 base at the beginning of this year. RMB 50 million will be allocated to accelerate the development of the Web3 ecosystem, including organizing large-scale international seminars to allow the industry and enterprises to better grasp cutting-edge developments, promoting cross-sector business cooperation, and organizing more youth workshops.

On April 11, the Hong Kong Web3.0 Association was established. The members of the association include Li Feng, chairman of China Mobile Hong Kong, Chen Chun, academician of the Chinese Academy of Engineering, and Qiu Dagen, a member of the Legislative Council of Hong Kong's science and technology innovation community, etc., aiming to Promote the healthy and sustainable development of Web 3.0 in Hong Kong, provide policy direction to the SAR government, and attract industry elites to Hong Kong.

On May 18, the Hong Kong Monetary Authority announced the launch of a digital Hong Kong dollar pilot plan. 16 selected companies from the financial, payment and technology sectors will conduct the first round of trials this year to conduct in-depth research on the potential use cases of the digital Hong Kong dollar in six areas, including comprehensive payments, programmable payments, offline payments, tokenized deposits, Third generation Internet (Web3) transaction settlement and tokenized asset settlement.

On May 25, the Hong Kong Securities and Futures Commission published the "Guidelines Applicable to Virtual Asset Trading Platform Operators" and "Guidelines on Combating Money Laundering and Counter-Terrorist Financing (Applicable to licensed corporations and those issued by the SFC)" "Licensed Virtual Asset Service Providers", "Guidelines issued by the Securities and Futures Commission on the Prevention of Money Laundering and Counter-Terrorist Financing Applicable to Licensed Corporations and Associated Entities of Virtual Asset Service Providers Licensed by the SFC ” and the “Guidelines on Disciplinary Punishments and Fines of the Securities Regulatory Commission” and other regulatory documents.

On May 31, the Hong Kong Securities and Futures Commission issued a circular on the transitional arrangements for the new licensing system specifically designed for virtual asset trading platforms. The transitional arrangements are intended to provide services for all securities companies operating in Hong Kong before June 1, 2023. Provide virtual asset trading platforms that provide virtual asset services and are prepared to comply with the SFC’s standards with a reasonable and sufficient time to allow them to apply for licenses and review and revise their systems and controls to comply with the applicable Legal and Regulatory Requirements.

On June 1, the "Guidelines for Virtual Asset Trading Platform Operators" came into effect. The Guidelines stipulate a number of standards and requirements applicable to licensed trading platforms, including safe custody of assets, segregation of client assets, avoidance of conflicts of interest and network security. The SFC will provide additional guidance on the new regulatory requirements, other implementation details (including license application procedures), and details of transition arrangements.

On August 3, HashKey Exchange received official upgrade approvals for licenses No. 1 and 7, becoming Hong Kong’s first licensed trading platform for retail users. This license upgrade will further expand the business scope of the HashKey trading platform from only professional investors to retail investors to meet market demand and provide retail investors with more secure and convenient currency purchase and deposit services.

On August 3, BC Technology Group announced that its wholly-owned subsidiary OSL Digital Securities Limited received approval from the Hong Kong Securities and Futures Commission to upgrade its existing license, and the platform officially provided Bitcoin and Ethereum to retail investors. Digital asset trading services for mainstream currencies.

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On August 7, the Hong Kong Securities and Futures Commission issued a document "Understanding Licensed Virtual Asset Trading Platforms" stating that it has recently noticed that some unlicensed virtual asset trading platforms have falsely claimed to have submitted documents to the Commission. License application. These claims are not only untrue, but also mislead the public into thinking that these platforms comply with SFC regulations.

On August 24, the Hong Kong Monetary Authority released the "Tokenization of Hong Kong Bond Market" report, summarizing the experience learned from the issuance of the first batch of tokenized green bonds of the SAR government and outlining the measures to promote tokenization. The next step is to plan for the wider application of technology in the Hong Kong bond market.

On September 29, the Hong Kong Securities and Futures Commission published multiple lists of virtual asset trading platforms on its website to ensure that information about virtual asset trading platforms is released in a clear, transparent and timely manner.

On October 20, the Hong Kong Securities and Futures Commission updated the cryptocurrency market regulatory policy based on new market developments. In the revised notice, five major segments of the crypto industry are covered. These include distributing virtual asset (VA) related products and providing cryptocurrency trading services, asset management platforms, consulting services and implementation steps.

On October 25, Li Jiachao delivered the "Chief Executive's 2023 Policy Address" to the Hong Kong Legislative Council, which stated that the Hong Kong government will issue management measures to promote data circulation and ensure data security within this year to drive development with data. , including the use of blockchain technology to issue and verify a variety of electronic license plates and certificates.

On October 30, the Hong Kong Monetary Authority released the "First Phase Report of the Digital Hong Kong Dollar Pilot Plan". The first phase of trials of the pilot scheme shows that the digital Hong Kong dollar may bring unique value to Hong Kong’s existing payments ecosystem in three aspects, including programmability, tokenization and instant settlement.

On November 2, the Hong Kong Securities and Futures Commission issued a notice: Financial institutions are increasingly interested in the tokenization of traditional financial instruments. Regulators have provided new guidance for intermediaries entering the space, exploring the tokenization of securities and distributing tokenized securities to clients.

On November 2, Hong Kong Treasury Bureau Hui Ching-yu announced the "Three Major Measures to Link Financial Technology to Benefit the Development of the Real Economy", including establishing a new comprehensive fund platform for retail fund distribution and welcoming the cross-border use of digital renminbi. , Promote the application and innovation of virtual assets and Web3.0 fields related to the real economy, and further improve the regulatory structure.

On November 24, Mulan Asset Management was approved by the Hong Kong Securities and Futures Commission to provide virtual asset-related services No. 1, 4 and 9 licenses. Its business focus will support professional investors to acquire virtual assets in a smarter way through compliance solutions.

On December 22, the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority stated that they had reviewed the current policies for intermediaries wishing to engage in virtual asset-related activities. In addition to existing cryptocurrency futures ETFs, the China Securities Regulatory Commission said it is ready to accept authorization applications from other funds involved in virtual assets, including virtual asset spot exchange-traded funds (VA spot ETFs). In addition, the SFC sets out requirements for funds to invest directly in the same spot VA tokens that the Hong Kong public can trade on an SFC-licensed virtual asset trading platform (VATP).

The China Securities Regulatory Commission pointed out in the circular that cryptocurrency transactions by such ETFs should be conducted through cryptocurrency platforms licensed by the China Securities Regulatory Commission or authorized financial institutions. In terms of custody, the Securities Regulatory Commission stated that the trustee or custodian of the fund can only entrust its cryptocurrency custody function to a VATP licensed by the Securities Regulatory Commission or an institution that meets the cryptocurrency custody standards promulgated by the Monetary Authority.