'High-End Dialogue' Hong Kong Legislative Council Member Eddie Chu: Hong Kong will become the 'center' of Web 3 policy innovation in the future

Article author: Echo, MetaEra Article Source: MetaEra Recently, MetaEra Hong Kong launched a major event, the 'Hong Kong encryption new policy two-year anniversary celebration', with the 'High-End Dialogue: Hong Kong Web 3 Influential Leaders' as a key part. This issue features an interview with Hong Kong Legislative Council member Wu Jiezhuang.

Character Introduction Wu Jie Dealer is a member of the Hong Kong Legislative Council and a member of the National Committee of the Chinese People's Political Consultative Conference. Hong Kong, as a special administrative region of the country, is becoming an important promoter of new quality productivity. Wu Jie dealer believes that the development of Web 3 in Hong Kong, like the red chips of the year, is a new way to raise high-quality assets of the country and Hong Kong on the international stage. In the past two years, the Government of the Hong Kong Special Administrative Region has actively developed virtual assets and Web 3 policies, which are important measures to help the country promote new quality productivity under one country, two systems. Essential Perspectives The most important reason why Hong Kong can become the center of Web 3 is that it relies on mainland China and follows the principle of 'one country, two systems'. · The regulation of Hong Kong in the Web 3 virtual asset industry can be described as "moderate and effective". · In the digital economy, in addition to the "Internet +" model, two new concepts of "artificial intelligence +" and "data element layer" are now proposed. Especially at the data element layer, I think there's a huge opportunity. As an 'risk-based' international financial center, Hong Kong's choice to regulate through managing exchanges and issuing licenses is undoubtedly the most comprehensive and reliable method. · The Hong Kong government's attitude is clear, willing to innovate, willing to be at the forefront. Full Interview MetaEra: Since the release of the 'Policy Statement on the Regulation of Virtual Asset Trading Platforms' in Hong Kong in 2022, it has taken the lead in developing the field of virtual trading and has successively issued virtual trading licenses. Why did they choose virtual trading as the first step in the development of Web 3? Some people discuss the courage of the Hong Kong government in developing Web 3, while others say that taking too big a step may pose risks. What is your opinion on this? Wu Jie dealer: Behind the 2022 policy declaration by the Hong Kong government, there is a specific historical background. The outbreak of the COVID-19 pandemic in 2020 led to a temporary delay in the opening of Hong Kong. By the end of 2021, we noticed that some virtual asset companies had started to leave Hong Kong one after another and turn to other regions. In light of this, we had in-depth discussions with the government and believed that in order to firmly promote the development of the virtual asset industry, it was necessary to issue a declaration to demonstrate our determination to the world. Therefore, we chose to announce these policy contents at the Hong Kong Fintech Week that year, an important moment. Two years ago, the policy declaration was just a Node in the development of virtual assets in Hong Kong. In fact, Hong Kong's development in the field of virtual assets dates back much earlier than 2022. Since 2016 and 2017, Hong Kong has become a vibrant center for Web 3, attracting many international entrepreneurs to launch their virtual asset projects, exchanges, and public chains here. Hong Kong's virtual asset exchange 'sandbox' mechanism was established as early as 2018 and 2019. Many companies joined the sandbox program in 2019, including three licensed companies known to us today, two of which entered the 'sandbox' at that time. Subsequently, after a period of development, Hong Kong's financial management and regulatory agencies, through close communication with the industry, formulated a grounded 'risk-based' management approach. Finally, at the end of 2022, the Hong Kong Legislative Council passed relevant legislation, officially announcing the 'policy declaration for the development of virtual assets in Hong Kong', which is the history of this declaration. You just asked why virtual asset exchange was chosen as the first step in development. As is well known, in the field of virtual assets, exchanges play a pivotal role, and all investors and institutions need to buy and invest through exchanges. Therefore, Hong Kong, as an international financial center with a 'risk-based' management approach, chooses to regulate exchanges and issue licenses for regulation, which is undoubtedly the most comprehensive and reliable approach. Hong Kong has rich experience in managing various types of products, especially in securities trading and other financial product transactions. Although virtual asset trading belongs to the same category, how to adopt the same risk and regulatory methods while taking into account the risks of investors and the development of the market and industry is the challenge facing Hong Kong in this area. I believe that the step taken by Hong Kong has been carefully considered and is the result of long-term brewing. MetaEra: The COVID-19 pandemic may also have some impact on the development of Hong Kong's Web 3. Wu Jiezhuang: The epidemic has indeed had a certain impact on the development of Web 3 in Hong Kong. The travel restrictions during the epidemic period have made many enterprises more cautious in choosing their work locations. However, with the gradual relaxation of restrictions in Hong Kong, we have observed that some enterprises that had originally moved elsewhere are beginning to return. The policy declaration issued by the Hong Kong government not only demonstrates Hong Kong's firm determination for the development of Web 3 to the world, but also provides confidence to these enterprises. For example, on January 9, 2023, Hong Kong held a large-scale event, which attracted about five hundred participants on the first day of its opening. The declaration's release and the opening also revitalized Hong Kong's vitality. MetaEra: You have sought industry opinions to promote Hong Kong as a global center for Web 3. Web 3 encompasses key areas such as asset trading, OTC, Stablecoin, RWA, and other important components. When it comes to high-volatility assets, regulatory policies must be in place. In which areas are Hong Kong's current regulatory policies more relaxed and in which areas are they stricter? Wu Jie dealer: The regulation of the virtual asset industry in Web 3 in Hong Kong can be described as "moderately proactive". This regulation is neither too loose nor extremely strict. From a 'strict' perspective, we are very strict in protecting small investors. For example, our virtual asset exchange regulation is different from other countries and regions, requiring exchanges to separate their own assets from customer assets, and customer assets must be 100% insured. This practice has learned from the lessons of the past few years, when we heard a lot of news about exchange bankruptcies or being attacked by hackers, and ultimately the investors were the victims, which affected market confidence. The current and future regulatory framework in Hong Kong aims to prevent such incidents from happening and ensure the protection of investors' interests; at the same time, we are also very strict with exchanges. The Hong Kong government has gradually clarified a series of regulations for virtual assets, starting with virtual asset exchanges, followed by stablecoins and over-the-counter (OTC) trading. In the recent government work report, the Chief Executive also mentioned the importance of virtual asset custody, and I am personally actively promoting DAO legislation. From a 'loose' perspective, the reason why Hong Kong's regulatory environment is considered relatively loose is partly due to its unique status of 'one country, two systems.' Within this institutional framework, Hong Kong implements a capitalist system, providing a fertile soil for financial innovation. Hong Kong follows common law, and as long as it does not conflict with existing laws, any matter not explicitly prohibited by law can be attempted and innovated, including stablecoins and over-the-counter (OTC) trading mentioned earlier. Currently, these areas do not have written laws, and relevant legislation is expected to be introduced next year. Under the current legal framework, street vendors of OTC trading in Hong Kong can still conduct business without clear legal constraints, providing them with opportunities to continue operations and facilitating innovation. Corporate merchants are able to explore more optimal business models and continue to develop on this basis. So I think the most important reason why Hong Kong can become the center of Web 3 is relying on Mainland China and following the principle of "One Country, Two Systems". The advantage of this system is that Hong Kong can leverage a large number of technical talents, especially in Shenzhen adjacent to the Guangdong-Hong Kong-Macao Greater Bay Area, where there are many young and capable engineers whose innovative spirit and practical ability are Hong Kong's unique advantages. In addition, Hong Kong is a traditional financial center, not only with active stock market trading, but also with a large number of regional or global headquarters of global banks, ranking top in Assets Under Management in the world. This provides a solid foundation for the more financially oriented parts of Web 3, such as virtual asset trading. Coupled with Hong Kong's pragmatic and innovative practices in the Web 3 field, I am confident that Hong Kong can become the center of global Web 3 in the future. MetaEra: Regarding Trump's plan to include BTC in the strategic budget reserve mentioned at the BTC conference, you have expressed the same opinion on social media. What do you think is the importance of including BTC in the strategic budget reserve? How likely is it to be actually implemented? Wu Jie dealer: BTC, as a more successful application of blockchain technology, has gone through fifteen or sixteen years since Satoshi Nakamoto proposed it about a decade ago. Although in the early days, BTC was attacked and vilified for its use in illegal transactions such as Money Laundering, purchasing drugs and weapons, today it has significantly increased attention in the TradFi field. Some traditional families and businesses have begun to include BTC and other virtual assets they consider valuable in their asset allocation. President Trump's views have prompted my reflection. I think the Hong Kong government should also study whether this area is feasible. I am not advocating that we must adopt or completely exclude this option, but suggesting that research should be carried out. After all, this issue has been widely followed, and research is a wiser approach. BTC, as an asset, has become a choice for many people's portfolios, but its price volatility, stability, and currency attributes are also debatable. Therefore, we can regard it as an electronic digital asset, similar to gold or other precious metals, with certain comparability, but not a true currency. Whether it is a country, enterprise, family, or individual, it is understandable to regard BTC as part of asset allocation. Therefore, it is reasonable for the country to consider this issue. This is also why I posted on social media to share this idea. In addition, the majority of participants in virtual assets are young people, especially those born after 2000 and 1990s, while the 1980s are already veterans in this field. As a person who has been engaged in technology and entrepreneurship for a long time, I am very concerned about the interests and hobbies of young people, because these are often the direction of future development. In particular, the significant increase in the volume of virtual assets is largely driven by the participation of young people. According to US data, about 50 million citizens hold digital assets, most of whom are young people. As for the idea behind President Trump, although I have heard that he does not quite agree with Bitcoin, it seems that he has now accepted it. This may be related to the election, but I am not willing to speculate too much about his intentions. However, the fact that political figures have expressed such opinions means that different places and countries need to consider this issue, and that is exactly my idea. MetaEra: We all know that the approval time of the Hong Kong Ether ETF is earlier than that of the United States. However, it is difficult to compare it with traditional asset trading based on actual data performance. So, what kind of driving force will the approval of the Hong Kong Ether ETF bring to the development of Hong Kong's Web 3? John Ng: I have always hoped that the Hong Kong government can play a leading role instead of just following. Traditionally, Hong Kong is accustomed to following the footsteps of the United States and other developed countries, observing their practices and moving forward only after confirmation. But in the Web 3 era, I hope Hong Kong can be a leader and drive innovation. This innovative leadership is reflected in two aspects: Ethereum ETF and asset substitution. In the United States, ETF shares must be traded with Fiat Currency, while Hong Kong allows the use of Virtual Money, such as Ether and BTC, to exchange shares. These two innovations are crucial. And the most important thing is the attitude towards trying. The attitude of the Hong Kong government is clear, willing to innovate, and willing to be at the forefront. Although nowadays, our trading volume may not be comparable to that of the United States. Because for the ordinary citizens of Hong Kong, it takes some time to accept this new type of asset. Hong Kong has experienced multiple financial crises, and there is often a cautious attitude towards financial innovation, not rushing into it. Citizens are more cautious because they have experienced multiple stock market crashes and investment product defaults. Therefore, the initial volume will not be too large, and institutional participation will also be relatively less. We are striving to optimize the laws and regulations, build a market ecosystem, attract more talent and funds to land in Hong Kong, hoping to increase the volume in this way. In addition to ETFs, I have also noticed that some online brokers have started to offer services for buying and selling four types of virtual assets directly with fiat currency, through licensed exchanges in the background. The volume of these transactions is quite substantial, sometimes reaching billions in a single day, which is not a small number. Therefore, I believe that Hong Kong's attitude towards supporting the development of the industry is clear. Our rise needs time to cultivate, including investor education and gradually relaxing policies to attract more diverse capital to participate in investment and trading in Hong Kong. MetaEra: In the current stage, is the development of Hong Kong's Web 3 focused on financial attributes or on directions such as technological innovation, talent cultivation, and project incubation? Is there any emphasis? Wu Jie dealer: From the government's perspective, as the supervisory department is the Financial Services and the Treasury Bureau (FSTB), the Hong Kong government's attitude actually leans more towards financial attributes. For me, Web 3 is not just a financial platform, it encompasses multiple important areas. The trading of virtual assets is a core part of it, along with many other technological applications such as artificial intelligence, data processing, and data display through methods like Metaverse. These are actually important components of Web 3. I suggested in the Legislative Council to establish a committee called the 'Committee on Web3 and Virtual Asset Development', which involves the participation of two policy bureaus, not only the Financial Services and the Treasury Bureau, but also the Innovation and Technology Bureau. The Innovation and Technology Bureau plays an important role in talent cultivation, enterprise project innovation, and so on. After the public chain and exchange, there are more application scenarios that need to be realized through different technological and innovative projects. These innovative projects rely on the joint creation of young people, engineers, and creative builders. Without them, there would be no trading partners, and no public chains for application and operation. Ultimately, everything comes down to the projects - they are the lifeblood, interrelated through the exchange, and each part is crucial. In conclusion, I believe Hong Kong should develop Web 3 comprehensively. MetaEra: As a member of the Hong Kong Legislative Council, I will follow the development of all aspects in Hong Kong. Hong Kong is very developed in finance, real estate, import and export trade, etc. So, is the contemporary young generation still suitable for achieving success in these areas? You have vigorously promoted the policy implementation of the Hong Kong government in the Web 3 field. Do you think Web 3 can become a new opportunity for Hong Kong's youth employment and even entrepreneurship? Ng Kai-chung: When I ran for the Legislative Council at the end of 2021, the core concept in my manifesto was to create industries and provide more opportunities so that young people in Hong Kong can have upward mobility. The reason for this proposition is that since the return of Hong Kong, local prices have remained high, and the development of industries has been biased towards finance and real estate. While these areas are mature, they limit the choices of young people entering society, making it very difficult for them to stand out in these traditional industries. Therefore, during my campaign, I hope to create more diversified opportunities for young people in Hong Kong with Web 3. Because I am relatively familiar with this industry and believe it is very suitable for young people in Hong Kong. As I just mentioned, this is not only an industry issue, I am also creating conditions in other industries such as technology, culture, sports, etc., which are suitable for young people, so that they can seize opportunities. Over the past decade, I have been dedicated to youth work, serving as the Chairman of the Hong Kong Youth Association and promoting exchanges, internships, and entrepreneurship activities for Hong Kong youth in mainland China. In this regard, I have done a lot of work and observed that Hong Kong's young people have a broad international vision and flexibility. Web 3 and other new industries undoubtedly present a huge opportunity for them and are crucial to Hong Kong's long-term development. Therefore, I am also striving to promote this agenda in the Legislative Council. MetaEra: I would like to know, what is the current employment market size in Hong Kong for Web 3? In your opinion, what kind of professional students are more suitable for the Web 3 field? Additionally, based on your observations, how receptive is the younger generation in Hong Kong towards Web 3? Wu Jie dealer: Since the relaxation of customs clearance policies in Hong Kong in 2022, coupled with the clear policy support and vigorous promotion of the Hong Kong government, we have witnessed foreign enterprises, including overseas and mainland enterprises, come to Hong Kong to start businesses and apply for licenses. Preliminary data shows that more than 500 companies have set up in Hong Kong, and the actual number may be much higher, even reaching 1,000. These businesses range in size, from employing about 200 people in Hong Kong to smaller ones of about a dozen to twenty employees. Overall, these companies provide nearly K to 10,000 jobs in the Hong Kong market. Of course, these jobs are not limited to local youth, but also include talents attracted through our talent policies, such as the "Highly Talented" and "Talented" Schemes, who come to Hong Kong to start businesses and find employment. I estimate that the number of these new jobs is closer to 10,000, which is the answer to the question of market size. As for the type of young people suitable for the Web 3 industry, I think it can be diverse. Web 3 is not only in the technical field, it covers various aspects such as programming, development, financial products, community activities, Marketing, and more. For example, products with financial attributes require an understanding of financial logic, the organization of communities and activities requires marketing capabilities, and Metaverse and 3D design require skills in art and graphic design. The entire industry chain is very broad, and different positions require young people with different attributes. As long as you are interested in this industry and willing to join, no matter what your learning background is, you can easily find a position that suits you. MetaEra: Previously in mainland China, in order to promote the development of blockchain technology, concepts such as 'coinless blockchain' and 'Chainplus' have emerged. In the current stage of developing virtual asset trading in Hong Kong, can it become a template and paradigm for the future development of Web 3 in mainland China? Dealer Wu: Since 2017, the Chinese mainland has imposed restrictions on virtual asset trading, while Hong Kong has always maintained an open attitude. Against this backdrop, the mainland and Hong Kong may achieve complementary advantages in this field: the mainland has rich application scenario resources, while Hong Kong excels in talent and market space. This complementarity provides the possibility for cooperation between the two regions in asset trading and financial operations. Hong Kong's 'one country, two systems' framework makes it an ideal place to experiment with new financial models, which may expand into broader areas in the future. In history, the Hong Kong stock exchange market has also gone through a process from disorder to regulation and ultimately developed into a key platform for corporate financing. Currently, many small exchanges in the Web 3 field may also undergo a similar integration process and eventually form a few or a single large exchange, which is a natural trend in the industry. The development of the mainland securities trading market has benefited from Hong Kong's mature experience. For example, Hong Kong's Charles Li Xiaojia will bring the rich experience accumulated in Hong Kong to the China Securities Regulatory Commission, promoting the maturity of the mainland Interest Rate market. This cross-regional communication highlights the advantages of "one country, two systems". We will continue to leverage the advantages of 'One Country, Two Systems' and steadily promote development. Considering China's scale advantage and unique path to modernization, we must proceed steadily, ensuring that each step is solid and reliable to achieve continuous and stable development. MetaEra: From your personal perspective, can Web 3 help Hong Kong become the new financial center of Asia? After all, cities such as Dubai, Singapore, and Tokyo are all competitively developing Web 3. What unique advantages do you think Hong Kong has? Wu Jiezhuang: I firmly believe that Hong Kong has the full potential to become the financial capital of Asia. As a representative of Asia in the map of the financial center of New Lun Port, Hong Kong has its unique advantages. As I have mentioned many times before, Hong Kong has the policy advantage of "one country, two systems", backed by the strong support of the country in the market, capital, and talent. Hong Kong has a well-established legal system, low and straightforward tax rates. Importantly, Hong Kong's forex market is freely accessible without any restrictions, which has remained unchanged since its return. Funds can flow freely, and foreign capital can be withdrawn without obstacles after making profits. This is a firm commitment to international investors and an important factor that attracts them. In addition, Hong Kong's legal environment is excellent. Therefore, I firmly believe that with these objective conditions, Hong Kong has the ability to develop into a financial center with more depth and breadth. MetaEra: In addition to being a member of the Legislative Council of Hong Kong, you are also a member of the National Committee of the Chinese People's Political Consultative Conference. As we are now promoting the concept of 'digital economy', how do you view the development of China in this field, and what are your wishes for the future? Wu Jie dealer: The digital economy is an extremely broad platform, occupying an important position in the country's "14th Five-Year Plan". As the closing year of the plan approaches, the core technology of the digital economy is expected to account for 10% of China's GDP, which is a very large number involving trillions of people's coins. Within the scope of the digital economy, we not only see the "Internet+" model discussed ten years ago, but also two new concepts, "artificial intelligence+" and "data factor layer". In particular, I believe that the data factor layer contains huge opportunities. The authorization, transaction, and utilization of data will greatly enhance the productivity and GDP of all industries in China's huge economic scale in the future, which in turn provides excellent opportunities for all industries to enhance digital development. The key is how to effectively utilize the data resources we have today. These data have always existed around us, but were not well collected and utilized before. Now, we have the technology and methods to apply data to all industries. I believe that with the establishment of the National Big Data Bureau, this will take an important step in promoting the country's digital development.