In a budget statement that was just released, the Hong Kong government showed a lot of interest in Web3, the third generation of the Internet industry, as a way to get ahead in terms of innovation and development.
The budget is for the fiscal year 2023-2024, and the Hong Kong government stated that it would allocate $50 million to organise significant international seminars to accelerate the development of the Web3 ecosystem. The budget statement seeks to improve industry and enterprise understanding of frontier development, promote cross-sectoral business cooperation, and organise a variety of youth workshops.
Regarding virtual assets (VA), the government stated it would maintain the policy statements issued in October last year. According to the official report, the next stage would be to establish and lead a task force on VA development comprised of members from relevant policy bureaus, financial regulators, and market participants. This task force would then provide recommendations.
On Monday, the Securities and Futures Commission (SFC) of Hong Kong initiated a consultation procedure for virtual asset service providers (VASP) seeking a trading services license. Additionally, the regulator is soliciting feedback on whether licenced platforms should serve retail investors and, if so, under what investor protection measures.
According to the notice, crypto trading platforms that intend to apply for a licence must evaluate and revise their systems and controls in preparation for the new regime. They added:
Those who do not intend to apply for a licence should initiate preparations for the orderly cessation of their Hong Kong business.
Under the proposed measures, operators will be responsible for conducting due diligence and monitoring tokens, including assessing the regulatory status of the asset in each jurisdiction where the operator offers trading services.
