Hong Kong Legislative Council member Kenneth Lau: The gap between Web3 policies and Singapore is narrowing, and the Hong Kong dollar stablecoin may be launched next year.

In recent years, Hong Kong's attitude towards Web3 has undergone a significant transformation, demonstrating a commitment to promoting the development of the virtual industry. As a member of the Legislative Council of Hong Kong from the Technology and Innovation sector and a proponent of Web3-friendly policies, Kenneth Kwok has been paying attention to projects related to virtual currency early on. He believes that Web3 is not limited to virtual currency but also involves new directions in financial markets, personal data, and the internet.

Qiu Dagen stated in an interview that he is optimistic about the prospects of virtual currencies and Web3, comparing the current development stage of Web3 to the internet in 2003. Although virtual currency was initially a niche field, its development momentum has begun to emerge with technological advancements and increased applications.

Hong Kong's Web3 Policy Catching Up with Singapore

Regarding the skepticism about whether Hong Kong can truly become a crypto-friendly city, Qiu Dageng believes that Hong Kong and Singapore have relatively similar crypto policies, but their development directions differ. Singapore has an advantage in crypto payments but imposes strict regulations on ordinary people's virtual asset transactions.

Qiu Dagen explained that: "From an overall planning perspective, Hong Kong is slightly slower than Singapore, but there is not much difference in policy direction. The bank account opening issue has basically been resolved, and Hong Kong and Singapore are only a year or two apart on the timeline for supporting cryptocurrencies. Overall, everyone understands Singapore's approach, and if they can catch up in legislative aspects, the gap will be about a year or two."

After experiencing multiple cryptocurrency-related events last year, Singapore seems to have slowed down its development pace in the crypto field, which has also given Hong Kong more opportunities to catch up.

Hong Kong Dollar Stablecoin Regulatory Framework Plan

Stablecoins have become an important asset class in blockchain. As of September 20, the market capitalization of stablecoins has exceeded 120 billion USD. Qiu Dagen proposed the issuance of Hong Kong dollar stablecoins in his "Three Arrows and Three Circles" economic and technological development policy initiative to promote the development of virtual assets in Hong Kong.

Qiu Dagen stated that the regulatory framework for stablecoins in Hong Kong may be launched in June next year. There are still some issues, such as whether to allow interest payments to stablecoin holders. He believes that involvement from commercial banks may be more appropriate.

The Hong Kong dollar stablecoin has its own advantages: firstly, the issuance of the Hong Kong dollar is supported by US dollar reserves; secondly, Hong Kong has its own foreign exchange reserves that can be used to support the Hong Kong dollar during times of US dollar instability. Qiu Dagen suggested setting up a stablecoin sandbox environment to accelerate the development of the Hong Kong dollar stablecoin.

For other stablecoins issued in Hong Kong, such as the US dollar stablecoin, Qiu Dagen emphasized: "No matter what type of stablecoin is issued, as long as it is issued in Hong Kong, it must comply with Hong Kong's regulatory requirements."

Regulatory Recommendations After the JPEX Incident

Recently, the fraud incident involving JPEX at the Hong Kong Stock Exchange has raised concerns about cryptocurrency regulation. Hong Kong began issuing licenses for Virtual Asset Service Providers (VASP) on June 1, but local exchanges have been given a one-year transition period.

Qiu Dagen stated: "During the sales process of JPEX, we have received numerous complaints suspecting that it may be involved in pyramid schemes or illegal operations. However, according to Hong Kong law, operations cannot be prohibited solely based on suspicion without victims present."

To prevent similar issues from occurring again, Qiu Dagen suggests that users only trust licensed exchanges. For regulatory bodies, he recommends that the Hong Kong Securities and Futures Commission expedite the licensing review process.

Qiu Dagen emphasized that this is also a process of investor education. Hong Kong encourages the development of digital assets and the innovation of financial products, not asset speculation. If Hong Kong does not actively participate, it may fall behind in areas such as stablecoins, CBDCs, and virtual currencies.

Despite facing numerous challenges, such as policy uncertainty and risks associated with trading platforms, Qiu Dageng remains optimistic about Hong Kong's development in the digital asset sector. He believes that Hong Kong has a solid foundation and ample opportunities to stand out in this emerging field.