SFST's speech at Aspen Digital Web 3 Investment Summit (English only)
20.3.2023

Following is the speech by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, at the Aspen Digital Web 3 Investment Summit today (March 20): Ladies and gentlemen, distinguished guests, It is my great pleasure to meet you all here today at the Aspen Digital Web 3 Investment Summit. I am pleased to share with you the vision and strategy of the Hong Kong Government in supporting and promoting the development of Web3 technologies and applications. Web3 is not just a buzzword or a hype. It is a paradigm shift that will transform the way we interact with information, value and trust on the Internet, or on the future metaverse. It has the potential to enable more decentralised, efficient and inclusive platforms and services that empower users and creators. It will also create new opportunities for innovation, entrepreneurship and social impact. Hong Kong is well-positioned to be a leading hub for Web3 in Asia and beyond, and we attach great importance to virtual asset (VA) and Web3. The Government has high-level commitment of developing the sector and providing a comprehensive support system to enterprises which are passionate pioneers and start-ups in this area like all of you. We have a vibrant fintech ecosystem here in Hong Kong, with over 800 fintech companies offering different kinds of innovative and convenient financial services for members of the public and the business sector. On VA development, the Government issued the Policy Statement on Development of VA in Hong Kong last year, setting out the vision and policy direction of the Government. The Government and the financial regulators are committed to establishing a facilitating environment, with timely and necessary guardrails to mitigate actual and potential risks in accordance with international standards, so as to promote the sustainable and responsible development of the VA sector in Hong Kong. The Policy Statement has been well received by the industry. As of end-February 2023, Invest Hong Kong has received expressions of interest from over 80 virtual asset-related Mainland and foreign companies in establishing their presence in Hong Kong. These companies included VA exchanges, blockchain infrastructure companies, blockchain network security companies, virtual currency wallets and payment companies, as well as other projects on building the Web3 ecosystem. They primarily inquired about the implementation details of the Policy Statement, regulatory requirements, visa requirements on talent admission, targeted support measures for the VA and Web3 sector, etc. They also explored the feasibility of establishing businesses in Hong Kong. As of end-February 2023, 23 companies from the Mainland, Canada, EU (European Union) countries, Singapore, the UK (United Kingdom) and the US (United States) have indicated to Invest Hong Kong that they planned to establish their presence in Hong Kong. Their business areas included virtual asset exchanges, blockchain infrastructure, blockchain network security, etc. Another latest piece of work is to establish a licensing regime for VA service providers which will commence operation in June 2023. Through the establishment of a comprehensive and clear regulatory system, we are expecting more quality VA enterprises to set up businesses in Hong Kong or to seek development opportunities in Hong Kong. In addition, the Hong Kong Monetary Authority is working on a regulatory regime for "stablecoins" with an aim to implementing the relevant regulation in 2024. On market development, we have advanced our securities rules to allow regulated intermediaries to offer trading of eligible VA Futures ETFs to retail investors in Hong Kong; this makes Hong Kong a pioneer in the Asian market. Within a few months' time, we are glad to see that three VA Futures ETFs have already been listed and traded on the Hong Kong Stock Exchange. On the other hand, we are collaborating with the Mainland on testing the use of digital Renminbi for making cross-boundary payment in Hong Kong, and working with a number of central banks on a multiple central bank digital currency bridge project to expedite cross-border payments. We are also looking into the issues pertinent to possible issuance of e-Hong Kong dollar. Furthermore, to help fintech companies expand their business to the Mainland, Southeast Asia, and other regions, we launched a community online platform in December last year to encourage local enterprises to connect fintech companies with users and investors locally and globally. Currently, our Cyberport has housed a community of start-ups and technology companies, including a number of Web3-related technology companies in areas including financial technology, smart living and digital entertainment. Noting the development of Web3, Cyberport established the Web3 Hub@Cyberport early this year. On fintech talent, this year's Budget has proposed a fintech internship scheme for post-secondary students. Subsidies will be provided to participating students in Hong Kong and the GBA (Guangdong-Hong Kong-Macao Greater Bay Area). The scheme facilitates eligible students to acquire practical work experience in fintech enterprises in Hong Kong or the wider GBA, and helps them develop an early interest in pursuing a career in fintech after graduation. In light of the potentials of VA industry, the Financial Secretary just announced in this year's Budget that the Government will set up a Task Force on VA Development to examine the market situation, development opportunities, regulation needs and ecosystem of the VA sector in Hong Kong, aiming to formulate proposals on how to promote the sustainable and responsible development of the sector. Also announced in this year's Budget, $50 million will be allocated to expedite the Web3 ecosystem development by, among other things, organising major international events, to enable the industry and enterprises to better grasp frontier development and to promote cross-sectoral business co-operation, as well as arranging a wide array of workshops for young people. The preparation is in full swing. The Web3 ecosystem is a close-knitted net with efforts from a wide range of service providers and developers, connecting innovation and traditional finance which Hong Kong is championing at. While the Government will strive to cultivate a Web3-friendly environment for the industry to thrive, we also count on all of you to make best use of your expertise and develop in Hong Kong. Thank you.