Over 80 Web3 Firms To Set Up Shop In Hong Kong After June

Hong Kong has long been known as a hub for international finance and is now drawing the attention of blockchain and cryptocurrency companies. Over 80 Web3 organizations are reportedly in line to set up shop in Hong Kong ahead of the upcoming crypto regulations taking effect in June. The new regulations will require all cryptocurrency exchanges operating in Hong Kong to be licensed by the Securities and Futures Commission(SFC). 

Unlike China’s crypto ban, Hong Kong’s favorable tax policies and business-friendly environment has made it an attractive destination for crypto enthusiasts. Hong Kong’s Secretary of Financial Services and the Treasury, Christian Hui, announced that over 80 foreign and Mainland China companies had expressed interest in establishing Web3 security companies, Web3 software firms, and blockchain payment companies. 

What Crypto Regulations Will be Imposed Post June?

The SFC will also introduce stricter rules around Anti-Money Laundering(AML) and Know-Your-Customer(KYC) procedures. The fact that so many Web3 firms are choosing to set up their business in Hong Kong is a sign that they are committed to operating within a regulated environment. Hong Kong’s reputation as a financial and technological hub with relaxations on regulations has attracted many Web3 firms. 

The regulations for virtual asset service providers will align with traditional finance companies. Since Hong Kong announced crypto exchange regulations in October, several Web3 companies have decided to set up their firms in Hong Kong. At the Aspen Digital Web3 Investment Summit, Hui reported that 23 of 80 companies are already building their presence in the city. 

Hui also shared that the Hong Kong Monetary Authority is working on a set of stablecoin regulations, and is expected to be enforced in 2024. In addition, Hong Kong’s financial secretary, Paul Chan, has allocated HK$50 million (US$6.4 million) in annual budget spending for the growth of Web3 technology, as mentioned during the 2023-2024 budget speech in February. 

The move comes after China banned cryptocurrency transactions in 2021, making Hong Kong’s regulatory approach all the more attractive to the Web3 industry. While current regulations in Hong Kong only allow institutions and professional investors with portfolios of US$1 million or more to trade in digital assets. The new licensing regime could eventually extend to real crypto trading. 

Hong Kong’s regulatory approach, technological expertise, and government support have attracted businesses like Huobi Global to apply for a crypto trading license. The company is reportedly set to shift its Asian headquarters from Singapore to Hong Kong. The SFC intends to require cryptocurrency exchanges to apply for this crypto trading license and abide by the regulations. 

Hong Kong is set to be an ideal testing ground for developing crypto assets as it has the world’s largest offshore yuan market and has served as an important offshore yuan business hub. According to Angela Ang, senior policy advisor at blockchain intelligence firm TRM labs and a former regulator at the Monetary Authority of Singapore, the SFC is trying to balance the innovation of digital assets and investor protection in a world post-FTX. 

• Hong Kong is set to welcome the march of several Web3 firms after the launch of its new crypto regulations in June 2023.
• The Hong Kong government supports blockchain technology and has invested to aid in its development.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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