Qiu Dagen: Prudently promote the sustainable development of Web3 in Hong Kong

On September 19, 2023, the "2023 Shanghai Blockchain International Week·The Ninth Blockchain Global Summit" opened in Shanghai. Qiu Dagen, Member of the Legislative Council of the Hong Kong Special Administrative Region (Technology and Innovation Sector), gave a live speech titled "Steadyly Promote the Sustainable Development of Web3 in Hong Kong".

Golden Finance conducted on-site tracking and reporting of the entire meeting. The following is a summary of the speech content.

Dear guests and friends who are engaged in blockchain, hello everyone! I will briefly introduce Hong Kong's deployment in ten or twenty minutes.

To talk about the development of Web3 in Hong Kong, we must first improve it. Last year, when Hong Kong reviewed its 25th anniversary, President Xi came to Hong Kong and gave Hong Kong the task of "International Maker Center". Web3 is of course only part of it. The country regards Hong Kong as a "science and technology innovation center" and the country is on the road to becoming "the world's most powerful country".

Let's analyze it. If we want to become the world's most powerful country, we still have many aspects to deepen and stabilize. In the past, there were several directions that the world's leading power must pursue.

First, the influence of currency in the world;

Second, technological self-reliance and leadership;

Third, talent leadership drives the company.

In these three aspects, what can Hong Kong contribute as the country is on its way to becoming the world's most powerful country?

(1) Currency’s international influence. As we all know, Hong Kong, China, is an international circulation center for RMB and an offshore RMB center. Currently, Hong Kong has offshore RMB deposits of RMB 700 billion to RMB 800 billion. It is a center for promoting the internationalization of RMB. Of course, a very important part of monetary influence is financial innovation, including the third generation of the Internet, financial technology, digital assets, etc. These are all influences on digital currencies and are also important to our country.

(2) Science and technology are self-reliant and self-reliant. In terms of technological leadership, Hong Kong is a technology application center. In the past few years, the Hong Kong Special Administrative Region government has invested a lot of resources, with a total investment of HK$200 billion in the field of science and technology. In the past year or two, it has made more efforts in research and development to promote Hong Kong's strength as a technology research and development center. The Inno HongKong Laboratory Fund was established, and has invested 10 billion and 20 billion in the past to give commercialization to university scientific research projects. In addition, 10 billion will be invested a year into "Industry-Academic-Research 1+" to encourage R&D teams to promote R&D technologies to the commercial market and leverage Hong Kong's strength in upstream technology R&D. We hope that we can provide assistance to the country on the R&D road.

(3) Talent leadership and drive. In the past year, we launched the "High Talent Program" to bring world leaders in various fields to Hong Kong. In the past year, the "High Talent Connect" talent program has added 100,000 professionals in various fields to Hong Kong, especially in the field of science and technology. "Attracting talents" is a very important belief that can bring certain aspects of the world to the forefront. By attracting research experts in top fields to Hong Kong, they will cultivate the next generation, transfer knowledge, and attract more talents in this field to Hong Kong.

Regardless of whether it is in the capital market, currency innovation or technological research and development, talent gathering is the direction of development in these three aspects.

What has Hong Kong’s Web3 done in the past? In October 2020, Hong Kong put forward concepts on virtual assets and published the "Policy Declaration on the Development of Virtual Assets in Hong Kong". The Legislative Council discussed the "Ordinance on Combating Money Laundering and Terrorist Financing". The "Ordinance" governs the requirements for the trading of virtual assets. A virtual asset expert group was quickly established to promote discussion and exploration of regulations and products.

In February 2023, the Virtual Trading Platform Document (VASP) was released. Starting from June 1, the virtual asset service provider licensing system was launched, and HashKey became the first institution to be licensed. We have a platform that can operate compliantly and legally. What we want to talk about later is what types of products can be bought and sold, who can buy these products and who cannot buy those products, which products are for professional investors and which for retail investors... This is the next step to discuss.

There are currently two virtual asset exchange licenses that came into effect on June 1. The products that can be bought and sold will be defined in the future. Public consultations are also being conducted for retail investors. The products that retail investors can buy and sell will also be clearer. of formulation. Since the end of last year, different products have been launched on the market, allowing different investors to participate, including ETF products. There are ETF products linked to Bitcoin and Ethereum that are listed on the market and supported by different investors.

I won’t go into details about the licensing conditions. I hope that there will be a steady development of the Web3 market, and there needs to be a steady development direction of virtual assets. Platform operators must meet the requirements of capital, regulations, and professionalism to allow the industry to develop in an orderly manner. In terms of the licensing system, more platform operators will be introduced, more product innovation and product development will be promoted through different exchanges and platform operators, and Hong Kong will be built into an international center for virtual assets.

In terms of digital assets and tokenization, we launched an 800 million Hong Kong dollar tokenized green bond at the beginning of the year. Although it was issued in the form of private training, we did find that tokenization has many benefits after testing, such as shorter transaction time and lower transaction costs. The traditional method is greatly reduced. The different financial assets (bonds, stocks) issued by Hong Kong every year are calculated in hundreds of billions. If these products are issued through tokenization, more international people can participate, which will be very important for the development of financial products and financial markets. An important step.

We have been working on blockchain infrastructure for some time in the past, and now we are working on the underlying infrastructure. After the bottom layer is completed, we will then develop scenario applications. Directions include games, social networking, media, financial products, investment-related products, etc. In the next few years, these will coexist with new financial products, new games, new media, etc. driven by blockchain. During this period of coexistence, everyone slowly made a transition or migration, and finally the products provided by the existing Web2 world were completely replaced by Web3 or blockchain. Games, social media, investment products, banking products, etc. are yet to be developed.

Let’s discuss the suggestions I gave to the Chief Executive of Hong Kong last month. Every year, the Prime Minister will issue a policy address, in which he puts forward his ideas for the future. Members of the Legislative Council want to give suggestions to the government. My suggestions today are "three arrows and three circles". I won't go into detail about the "three arrows". Mainly to promote investment in the field of science and technology and government support programs.

(1) Tokenization.

I hope that the government will tokenize land through its own participation and promotion role. Everyone has heard that Hong Kong will develop new technology parks. In the northern metropolitan area, there are Xintian Technology City and the Loop. These are new lands that support the development of the technology field. . Hong Kong is having a big discussion about the land issue - should the government pay for construction, or through public-private cooperation, or through bidding to allow private investors to participate in land construction?

I suggest that land development be carried out through tokenization, and investors can participate in the development of Hong Kong land through the token mechanism, including future income and dividends. Everyone can do it through voting, and the government will do a pilot first. This move can change the current situation in the field of land development: in the past, land auctions in Hong Kong were only open to local developers. There were not many participants, international people could not participate, the handling fees were very expensive, and there were cost accounting laws.

But if this method is used, investors from all over the world can participate in land auctions. If it is tried on a small scale, the government can develop land revenue funds and let everyone decide the future dividends and interest return mechanism of a piece of land through voting.

Now some people are preparing to do a small-scale real estate STO, that is, merging several real estate projects and listing them on a virtual asset exchange, so that more investors can better participate in the real estate development and shop development in a certain area of Hong Kong. . Even if you don’t have such a large investment capacity, you can better participate in investment through tokenization, and because smart contracts are used for accounting, legal fees are eliminated, lower-cost operations can be achieved, and it will be easier to promote in Hong Kong.

(2) Digital Hong Kong dollar.

We are preparing for a digital Hong Kong dollar. The Hong Kong government has done a lot of preliminary planning. How to promote the digital Hong Kong dollar? Different tests have now been opened, mostly for applications between countries, but the digital Hong Kong dollar for retail investors is still in the discussion stage.

Different places in the world have different advancement speeds in digital currency CBDC. Hong Kong is one of the places that responds quickly. The country has also tested many CBDC scenarios. Hong Kong is following the country's pace and trying more different applications in CBDC scenarios. There are currently very few markets that have actually launched CBDC, mainly small countries. Among countries with great influence, our country is relatively well prepared.

CBDC can promote the orderly development of transactions, and its advantages such as low transaction fees, high security, and traceability are recognized by many countries.

Hong Kong has been exploring CBDC since 2019. We have conducted CBDC construction and capital exchange use scenarios with some countries (including Thailand and the Middle East), and have basically opened up large-scale capital exchange applications between cities.

My recent advice to the government is: people use CBDC. For example, the government issues medical vouchers to citizens every year. Can they be issued to citizens through CBDC? This method has the advantages of traceability, low cost, and the ability to prevent fraudulent use. Whether various coupons can be issued through CBDC is an important application scenario to promote the development of digital Hong Kong dollars. It is hoped that digital Hong Kong dollars will appear soon.

(3) Stable currency.

We are currently conducting the second round of consultation. We hope that by the middle of next year, Hong Kong can announce the regulatory conditions for stablecoins, allowing stablecoin participants to issue stablecoins in Hong Kong. Now there is a virtual asset platform, and the stablecoin under the virtual asset exchange is a very important access point. After the stablecoin is available, innovations in other virtual asset products and financial products will follow, which will have a deeper and wider impact on financial assets and digital assets. It is a good replacement and will promote the development of financial assets and digital assets.

I won’t go into details about stablecoins, you can find public information.

I briefly introduced Hong Kong's development in Web3 and my suggestions to the Chief Executive. I hope that the "Three Circles" proposal can promote the tokenization of stable coins, digital Hong Kong dollars and certain public products through the government, and promote Hong Kong to become a digital asset. International Center.

thank you all!