The Hong Kong Securities and Futures Commission (SFC) has officially commenced the implementation of the “Guidelines for Virtual Asset Trading Platform Operators” as announced on June 1. As one of the world’s leading financial centers, these new regulations not only bring increased transparency and standardization to the cryptocurrency market but also create new opportunities for Web3 enterprises.
Hong Kong Establishes Itself as the Global Cryptocurrency Hub
Hong Kong, as an international financial center, possesses unique advantages for the development of the cryptocurrency industry. With a highly developed financial services sector, Hong Kong boasts mature financial infrastructure and a vast pool of financial professionals. Additionally, Hong Kong’s legal environment is a crucial factor in its emergence as a cryptocurrency hub. The city’s independent legal system provides clear and stable regulations for commercial activities, which is paramount for the growth of the cryptocurrency industry.
The new regulations were formulated under the amended Anti-Money Laundering and Counter-Terrorist Financing Ordinance in 2022. This amended ordinance came into effect on April 1, 2023, while certain provisions regarding licensing requirements will take effect on June 1, 2023.
The main takeaways are:
- License requirements: The new revised regulations introduce a licensing system for cryptocurrency exchanges. This means that cryptocurrency exchanges operating in Hong Kong need to obtain a license.
- Requirements for professional investors: In the initial stage, VASPs (Virtual Asset Service Providers) holding a license can only provide services to professional investors. This requirement is set by the Securities and Futures Commission under the authority of the Anti-Money Laundering regulations.
- Penalties for violations: The revised regulations establish a range of misconduct and corresponding penalties. For example, companies operating without a license may face fines of up to 5 million Hong Kong dollars (640,000 US dollars), while senior executives may face imprisonment for up to seven years. If the misconduct persists, there is also a daily fine of 100,000 Hong Kong dollars (12,700 US dollars) to be paid.
The new regulations in Hong Kong have many positive implications for the cryptocurrency industry. Firstly, these regulations provide a clear legal framework for the cryptocurrency industry, which helps enhance market transparency and credibility. This may also attract more professional and institutional investors to enter the market as they typically prefer to invest in a regulated environment. Additionally, while these regulations impose higher requirements on cryptocurrency exchanges, they may also help prevent fraud and other illicit activities, thus safeguarding consumer interests.
In summary, Hong Kong’s new cryptocurrency regulations offer clearer guidance for market participants, and the implementation and enforcement of these regulations will have a significant impact on the future of the cryptocurrency industry in Hong Kong.
New regulations promote the development of the Web3 industry
Undeniably, the Hong Kong Special Administrative Region of China has become one of the globally friendly and highly-regulated areas in the field of encryption. Prior to this, the Hong Kong government had expressed its intention to become a global hub for virtual assets. The release of new regulations signifies a significant step towards Hong Kong’s goal of becoming a global center for Web3. Institutions and investors are rejoicing and celebrating this development, while individual retail investors will now have the opportunity to gain close insights into and trade encrypted assets.
Firstly, Hong Kong’s new cryptocurrency policy represents the increasing market attention to the development of the cryptocurrency industry in China, which will bring many benefits to the industry. Regarding this new regulation, the CEO of the Hong Kong Securities and Futures Commission, Ashley Alder, stated that providing clear regulatory rules can promote responsible development. Hong Kong’s comprehensive framework for regulating virtual assets follows the principles of ‘same business, same risks, same rules,’ aiming to provide adequate investor protection and control major risks, thereby promoting sustainable development and supporting innovation in the industry. At the same time, it also signifies that the Hong Kong government is gradually supporting the development of Web3 infrastructure, leading to continued growth in the Hong Kong sector.
Secondly, Hong Kong’s new encryption policy has revitalized the capital market in the region, making it more diversified and vibrant. The new regulations in Hong Kong signify the local government’s recognition of the long-term development potential in the field of encrypted digital assets, leading to an influx of funds into this domain. As early as last year, there were rumors within the industry that CCapital, a fund under the management of Zheng Zhigang, the heir to the fortune of a Hong Kong real estate tycoon and the Chow Tai Fook family, planned to raise $500 million over the next 18 months for investments in blockchain assets, credit, and private equity, betting on private companies and digital assets. With the introduction of Hong Kong’s new regulations, a new trend in the digital economy is gradually emerging. More and more “Old money” individuals who perceive this trend will inevitably bring substantial new capital flow to the cryptocurrency industry. The Hong Kong government’s increasing emphasis on Web3 and blockchain technology is positively impacting the relevant capital markets, leading to a peak period of investment for technology companies. This will likely result in the emergence of heavyweight digital trading platforms and digital asset management companies.
Thirdly, under the blessing of the new policies, practitioners in the blockchain industry will attract unprecedented opportunities for development. In fact, the first to perceive the changes in the industry are the entrepreneurs, and professionals within the industry feel a sense of a refreshing breeze with the release of new regulations. When discussing cooperation with clients and capital, there has been a shift from the stereotypical impressions of the past to a sense of recognition. With the support of favorable policies, large-scale projects, and capital implementation, it seems that the industry’s major breakthrough is not too far away.
INTOverse Web3, creating infinite possibilities
Amongst the cryptocurrency entrepreneurs, INTOverse, a community management solution for Web3, is one of the beneficiaries encouraged by this new regulatory policy.
Against this backdrop, the Web3 project INTOverse has also embraced a brand-new development opportunity, accompanying a quiet revolution in the social sphere.
As a Web3-based community management platform, INTOverse is dedicated to providing users with more secure, transparent, and efficient communication and transaction services. INTOverse’s strategic layout primarily involves integrating blockchain technology with social networking to seize industry opportunities. With its unique “social mining” feature, within just half a month, the daily active users have exceeded ten thousand, making it a social innovation driven by Web3.
On May 9, 2023, INTOverse launched its closed beta and introduced the “social mining” feature. This feature offers users a brand new social experience, known as “chat and mine” by perfectly combining social interaction with blockchain technology. It innovates the traditional social application model. Users can engage in chatting, content publishing, and other interactions on INTOverse, and these activities may earn them corresponding digital assets, integrating daily social behaviors with cryptocurrency mining.
For INTOverse, the new encryption policy in Hong Kong is undoubtedly a significant opportunity. It is understood that Hong Kong’s new policy is highly favorable for the development of the blockchain and cryptocurrency industry, especially in emerging areas such as Web3 and decentralized finance (DeFi). The Hong Kong government has clearly stated its support and encouragement for these sectors.
This policy provides a favorable external environment for INTOverse. Firstly, the recognition and support of blockchain technology in the new policy enable INTOverse’s “social mining” feature to develop more openly and freely within a legal framework. Additionally, the policy encourages more users and businesses to participate in the world of blockchain and cryptocurrency, which will undoubtedly bring more users to INTOverse.
Secondly, the positive attitude towards digital currencies and support for transactions in the new policy will help increase users’ sense of identity and value regarding the digital assets they obtain through mining on INTOverse. This will increase user activity and loyalty on the INTOverse platform, further driving its development.
Lastly, as an international financial center, Hong Kong’s new policy will attract more international capital and innovative companies to settle there. This presents an opportunity for INTOverse to expand into international markets, attract more users and partners, and further enhance its influence and competitiveness.
Overall, Hong Kong’s new encryption policy provides a tremendous opportunity for INTOverse’s development. With the introduction of the social mining feature and the support of the new policy, INTOverse is expected to create new frontiers in the social application market and lead the wave of Web3 social applications. With the growth of its user base and increased activity, INTOverse also has the potential to establish a strong presence in the future digital currency market. This is a social innovation and revolution driven by Web3 technology, and we have every reason to expect INTOverse to reach great heights in this new wave.