Web3 Harbour, a Hong Kong-based industry association promoting innovation and collaboration, and PwC Hong Kong unveiled the “Hong Kong Web3 Blueprint” on June 23.

The document outlines strategies to enhance blockchain infrastructure in the region.

Developed with input from industry stakeholders, the blueprint focuses on five key areas: talent, market infrastructure, standards, regulation, and funding.

It highlights applications in open finance, trade finance, capital markets, asset management, and carbon markets.

Gary Liu, chairman of Web3 Harbour, said the blueprint aims to guide private-sector efforts in integrating Web3 technologies into Hong Kong’s financial infrastructure.

The blueprint’s release comes amid rising global interest in stablecoins, especially after the US Senate passed the Genius Act.

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🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Hong Kong’s calculated evolution from traditional finance to Web3 hub

The Web3 Harbour blueprint represents the latest step in Hong Kong’s multi-year strategy to position itself as Asia’s cryptocurrency center, despite mainland China’s restrictive stance.

Hong Kong has been recognized as the most “crypto-ready” jurisdiction globally as of 2022-2023, attracting over 80 virtual asset-related companies within months of its policy statement on virtual assets 1.

This pivot leverages Hong Kong’s established financial infrastructure, where the financial sector accounts for approximately 25% of GDP and employs around 270,000 people 2.

The city’s blockchain ecosystem has shown remarkable growth, with blockchain firms accounting for 39% of new fintech companies in 2019, and the total fintech sector expanding to over 800 companies by 2023 1.

Hong Kong’s strategic positioning creates a bridge between China’s massive market and global investors while maintaining regulatory independence, allowing it to experiment with policies that might not be permitted on the mainland.

2️⃣ Stablecoins emerge as cornerstone of Hong Kong’s Web3 regulatory framework

Hong Kong’s stablecoin ordinance, taking effect in August, represents a critical foundation for its broader Web3 ambitions by addressing one of cryptocurrency’s most crucial infrastructure components.

The stablecoin market has grown to approximately $232 billion in total market capitalization, highlighting their fundamental role in providing liquidity and stability to the broader crypto ecosystem 3.

The HKMA began exploring stablecoin regulation in January 2022, demonstrating that this recent legislation is the culmination of over three years of deliberate policy development rather than a sudden initiative 4.

The regulatory approach balances innovation with oversight by requiring stablecoin issuers to obtain licenses and comply with asset management and consumer protection standards 5.

3️⃣ Hong Kong’s strategy leverages public-private collaboration amid regional competition

The Web3 Harbour blueprint emphasizes private-sector leadership, reflecting Hong Kong’s pragmatic approach to developing technological infrastructure without direct government control.

Hong Kong’s inaugural Web3 Festival in 2023 attracted over 300 industry leaders and experts, demonstrating the city’s ability to convene global talent and companies in this emerging sector 1.

The ecosystem development is supported by established institutions including Cyberport and the Hong Kong Blockchain Society, creating a network of resources for startups and established companies alike 6.

The SFC’s approval of the first spot Bitcoin and Ethereum ETFs in Asia represents a significant competitive advantage in attracting institutional investment that might otherwise flow to Singapore or other regional competitors 2.

This public-private model creates a controlled environment for Chinese firms to engage with global digital finance while allowing Hong Kong to maintain its distinctive regulatory approach that differs from mainland policies 4.

Recent PwC developments

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