“If Hong Kong really intends to regulate DeFi, this will mean it has a stricter [environment] than Singapore,” said Lily King, chief operating officer of digital asset custodian Cobo.
The Web3 industry has been closely watching the development of a new regulatory framework for virtual assets in Hong Kong since the city revealed at the end of October its intention to become cryptocurrency hub. The city has frequently been compared with Singapore, which had been considered a friendlier market for related activity until Hong Kong’s policy shift.
Binance co-founder and CEO Zhao Changpeng speaks during a fireside chat with HashKey Capital CEO Deng Chao during the Hong Kong Web3 Festival on Wednesday. Photo: SCMP / Matt Haldane.
Some attendees had hoped that Hong Kong’s shift would provide some competition for Singapore in the region.
“We did see a very obvious trend of people flying to Singapore to make sure their business was part of this space,” Luke Liu, chief core ecosystem contributor at cross-chain protocol developer Poly Network, told the Post on April 4. “Hong Kong and Singapore can coexist in some sense, but there is definitely a very positive change going on recently because of the Hong Kong policy announcement.”
Under new regulations that go into effect in June, cryptocurrency exchanges serving customers in Hong Kong must be licensed by the SFC. Only two exchanges opted to be licensed under the existing voluntary scheme.
The Web3 Festival, which is organised by Hong Kong-based digital asset management firm HashKey Group, had more than 10,000 people sign up to attend ahead of the event, Financial Secretary Chan said in his opening remarks. It has also attracted several big-name speakers and exhibitors looking for new opportunities in the city.
Zhao Changpeng, co-founder and CEO of Binance, even dialled in via video for a fireside chat. Last month, the US Commodity Futures and Trading Commission sued Zhao and Binance over what it alleged was “sham” compliance with domestic regulations. The company has been scrutinised over connections to its local firm Binance.US, which legally is meant to operate as a separate entity.
Zhao was not asked and did not address his legal troubles at the conference, instead focusing on the topic of the chat: centralised finance, or CeFi, referring to platforms like Binance that hold assets for its customers as an intermediary. However, he did note that Binance is in talks with regulators in many markets.
“We are actively engaged with regulators all around the world,” Zhao said. “Many of them are very receptive, some of them are still sceptical, and that’s fine, but we need to engage. We need to have dialogue, we need conversations, and we also need patience.”
Many large cryptocurrency firms were in attendance, including OKX and Filecoin, as were traditional tech firms. Tencent Cloud had a booth touting their blockchain-related services for corporate clients. Alibaba Cloud was also a co-organiser, along with Amazon Web Services and Hong Kong’s Cyberport. Alibaba Group Holding owns the Post.
The event came hot on the heels of the WOW Summit, another Web3 event, held in the city last month. Attendees of the latest Web3 conference appeared quietly optimistic about the potential of Hong Kong’s Web3 development despite the possibility of more regulation.
“I am very encouraged by what I’m seeing and hearing in Hong Kong and hearing directly from officials. I think there is a sense of inclusion, there’s a sense of forward-lookingness, and I think that’s a good thing,” said Hong Fang, president of cryptocurrency exchange OKX. “It’s a very fluid situation, but I can see Hong Kong being a very important hub for our team, together with the US and some other offices.”
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