Author｜
On the evening of June 6, the third episode of the Web1 online interview program "Bailu Living Room" was officially launched. The theme of the third interview was:Will Hong Kong’s new crypto policy bring about a new bull market?" Bai Lu is the co-chairman of the Asian Metaverse Alliance, vice chairman of the Hong Kong Blockchain Association, and executive vice president of the Shenzhen Information Industry Blockchain Association. In the third interview, Bai Lu invited several institutional figures and well-known Web3 KOLs to have a chat.
Bao Yu, True Digital Foundation
Tony Tang, President of Hong Kong Blockchain Association
Xu Zhihong, Founder of naodongdak.AI
Loki, blockchain expert at Xinhuo Technology
Tony, CEO of NFTChina
Batman, VP of Negentropy Capital
Randal, Web3 Sales Director, Huawei Cloud, Hong Kong
1. From the Hong Kong Declaration to the implementation of the new Hong Kong policy, what changes have taken place in the virtual asset market?
2. What opportunities does Hong Kong’s new virtual asset policy bring to Hong Kong’s development?
3. Will there be a large influx of Old Money into Hong Kong after the new policy? Will it accelerate the arrival of the bull market?
4. As market participants, how should institutions, retail investors, exchanges, etc. seize this historical opportunity?
5. Web3 has been discussed as a human issue along with AI, and the recent popularity of World Coin fully demonstrates that this paradigm of changing production relations is taking effect. Can you imagine the Web3 world in your mind?
Bailu : Good evening everyone, welcome to the Children's Day · Hong Kong's New Cryptocurrency Regulations Live Special Program, and welcome to all the guests participating in this Twitter Space.The first question tonight is, from the Hong Kong Declaration to the implementation of the new Hong Kong policy, what changes have taken place in the virtual asset market?
Tony Tang : The blockchain virtual asset industry was actually initiated in Hong KongMost of the world-renowned companies, such as FTX, started in Hong Kong. The executives initially recruited were all Chinese. USDT, Crypto.com, etc. were also launched in Hong Kong. Since 2018, the Hong Kong Securities and Futures Commission has successively issued some guidelines and consultations for the crypto industry, including the framework guidelines for the issuance of security tokens (STO). In 2019, the Hong Kong Securities and Futures Commission already had detailed guidelines on virtual asset licenses, virtual asset management licenses, and virtual asset exchange licenses, but the action was actually relatively slow. Later, when the epidemic came, many Hong Kong companies moved to Singapore. Like last year's Token 2049, the global focus was on Singapore.
The framework for issuing coins in Hong Kong is based on the guidance of the Hong Kong Securities and Futures Commission, which is the STO security token. One of the requirements is that the project needs to have an operating history of more than 12 months. More than two years ago, Hong Kong issued the first No. 7 license to OSL, and later the second No. 7 license was given to Hashkey. There should be 9 to 9 No. 10 asset management licenses at present.
I found that five years ago, many people in traditional finance didn’t care about virtual assets, but many real estate investments made by traditional funds went bankrupt. In the past two years, many traditional listed companies, family offices and investment funds have taken the initiative to join our Hong Kong Blockchain Association to learn about Web3 and learn about blockchain-related virtual asset investments.
In fact, most investors in Hong Kong, whether retail or institutional, have been standing by and watching.The implementation of the new policy of the Hong Kong government on June 6st will surely attract many companies and retail investors. At present, there is a compliant whitelist mechanism, which only includes mainstream currencies such as Bitcoin and Ethereum, as well as two STOs. In the future, more and more other virtual assets will be added to the whitelist to allow retail investors to participate.
Bailu : Thank you Tang Yi for helping us sort out the changes in Hong Kong over the past five years.Hong Kong got up very early, but later due to policy reasons, high-quality projects slipped away overseas. Now it is regaining its vitality.Zhihong is familiar with traditional finance and Web3 finance, and is a KOL who has always been on the front line. Please tell us about your impressions.
Xu Zhihong:As far as licenses are concerned, the new Hong Kong policy is undoubtedly very welcome. In the past decade or so, Hong Kong has played a very important role in securities and insurance transactions in Chinese-speaking regions around the world. Tiger Securities and Futu Securities both started here. Hong Kong's policy will definitely have a huge impact on the mainland. Everyone knows that the Chinese market is a very large market, and no one does not want a piece of this pie.
I thinkThe bigger point is, will there be any changes to the Hong Kong dollar stablecoin?To be honest, the foundation of the Hong Kong dollar stablecoin is very good. You can think of the Hong Kong dollar as a mapping asset or bridge asset for the US dollar. If the Hong Kong dollar stablecoin can be promoted, this is a particularly large variable, and Hong Kong will also have greater opportunities. In the Chinese world, the main consumption scenario of the Hong Kong dollar is actually the securities market, and the scale of real cash payments is still much smaller. Therefore, I pay special attention to Hong Kong's stablecoin policy. At present, it seems that no one has paid attention to this.
The second point that I am particularly concerned about is:What will Hong Kong’s DeFi policy look like?Because some countries and regions are actually wavering, whether to do KYC, how to make a sandbox, etc., are still big questions. But there is no doubt that today is a very important turning point, and retail business has started in Hong Kong. I wonder if there will be many KYC accounts in the future, and the new Crypto business in Hong Kong may create another victory for Coinlist.
Loki : I would like to add something from the perspective of a pure native Web3 practitioner. First of all, regarding the attitude towards Hong Kong policies, for traditional Web3 practitioners, our concepts and attitudes have changed. When the Hong Kong Declaration was released in Q3 last year, everyone was skeptical about it. This is because Hong Kong has mentioned many things before, such as recreating a Silicon Valley, but the actual results in the end were much smaller than the slogans. Therefore, everyone was not so excited at the time, and they were worried that the new Hong Kong policy was just talk and would not be actually implemented, or that the final effect of the implementation would not be that great.
The turning point came this year.Web3 Festival.Although everyone still has differences on this event, it is undeniable that it gives the entire Chinese Web3 practitioners an opportunity to meet and chat, and also allows everyone to come to Hong Kong to experience the actual atmosphere here. We found that some high-level officials attended the event, and you can also see a lot of crypto advertisements on the streets of Hong Kong. These are a very big impact on us, making everyone feel that this time Hong Kong is really not just talk.
Recently, the previous policy plans have been implemented step by step without any discounts, and some have even exceeded everyone's expectations. For example, opening up to retail investors was unimaginable a few months ago. There was no so-called Hong Kong concept last year, but at the beginning of this year, a lot of Hong Kong concepts began to appear.
Now, I think that we are graduallyReturn to rationality,In fact, the entire crypto market is also such a gradual process. To give a simple example, in the past few months, basically all exchanges have mentioned actively applying for VASP licenses, but objectively speaking, not all exchanges need VASP licenses. For companies, different businesses require different licenses. If you just follow the trend to apply for these licenses, it is definitely unnecessary. Not to mention, applying for a license will also bring considerable costs. For institutions, it is definitely to clarify their strategic planning after the policy is implemented, rather than blindly following.
In general, whether it is the actual feelings of practitioners or the development of the market, there will be fluctuations: the initial reaction will not be very strong, there will be a peak later, and after it is actually implemented, everyone will feel happy and return to rationality. Therefore, I am very much looking forward to the changes in the entire crypto market after June 6st. These changes are real industry changes, and some positive factors in the industry will begin to emerge.
Bao Yu : I think there are three questions to think about. The first question is,How many exchanges does Hong Kong really need?Is it 100 or 200? 10 or 20? Or 3 or 5? In the past, many people wanted exchange licenses. The cost was about HK$2000 million, and it seemed that many people could afford it. But how many exchanges does Hong Kong need, and what is the reasonable range?
Bailu : I heardAn insider information is that there will be no more than 7 exchanges with Level 10 license plates.The reason why Hong Kong was able to move so quickly this time must be because of Beijing’s support.
Bao Yu : You can't express support or not in this way. I don't think Hong Kong will do this. The principle in Hong Kong is that if the conditions are met, they will be allowed to do it. It won't be limited to 10 companies. In the mainland, it may be limited to no more than 13 new energy vehicles.
Xu Zhihong : Let me add something. You can compare the securities licenses in Hong Kong and mainland China. In the logic of Hong Kong's rule of law, there will not be a limit of only 10 companies. I am very skeptical about this.
Bao Yu : There are actually many small brokerages and penny stocks in Hong Kong, and the Hong Kong Securities and Futures Commission has not issued any documents to force them to delist, because its procedures are legal and all documents comply with current regulations. The Hong Kong government would like to have a thousand institutions apply for VASP licenses, but it is only a matter of stamping 1000 times, which is not a bad thing.
The second question is,After this round is over, will Bitcoin still be the one that rises in the end?Each previous round of reincarnation eventually pushed Bitcoin up a level. The third question is, can it produce some new effects? Because Hong Kong is actually the last major financial center in the world to advance. London, Dubai, New York, Singapore, and Switzerland have all done it. If the last one to do it is just a simple popularization of crypto, I don’t think it will have a big market, and it may not be a bull market.
At this stage, many old money in Hong Kong are still waiting and watching, and they have not made any moves., or just spend a little money to set up an incubator. Compared with the radical approach of the Hong Kong government's financial team, Hong Kong's old money is a bit on the sidelines. Of course, after the mainland and Southeast Asia come in, that's enough. But can it really produce something with a technological core?
There is nothing particularly special about compliance in Hong Kong itself.A few years ago, I attended a cocktail party in Hong Kong to discuss compliance. A very senior person told me that according to the views of Hong Kong people or Europeans and Americans, regulation will never make your business.Compliance will never create business opportunities for youCompliance is just a necessity for an economy to operate, just like your car must have tires. But business still has to find innovative ideas.
Now that the Hong Kong government has fulfilled its promise, everyone should start thinking about what they are going to do. This is the key.
Bai Lu: Is the new compliance policy on June 6 an unexpected opening or a smooth implementation?
Bao Yu : I think there are two points. The first point is that the Hong Kong government really takes it seriously. It has taken into account all the issues that should be considered, and has not avoided listing, KYC, deposits and withdrawals, and retail investors. It has not dodged or dodged. If it takes compliance more seriously than other countries, Singapore will never come up with such an encouraging policy. It just doesn't arrest people, and it is impossible to open up. In the United States, the Congress quarrels and the SEC also selectively enforces the law.
The second point is that the Hong Kong government has implemented risk control in a methodical and step-by-step manner.It doesn't mean to let go completely at once, because that would lead to a huge chaos and end up with a mess.For example, listing coins is divided into several steps, and exchanges cannot list coins randomly.
Bailu : If we compare each country and region to a company, Hong Kong is charging forward and doing things seriously like a company founder, while other countries are just sending less important leaders to lead compliance.Hong Kong is the most entrepreneurial city in the compliance field, Hong Kong still has a chance to surpass the United States.
Tony Tang : In the United States, many things are done by asking you to do them first, and then arresting or fining people after you have done them. The SEC did not clearly define what is a security and what is an application token at the beginning, but later said that you are not an application token, but a security token, and fined or arrested people one by one. This is the usual practice of the United States. This time, Hong Kong is still clearer. How to list coins? What is a whitelist?
Bailu : I think that after Hong Kong complies with the regulations, the second half of the year will still be a period of preparation. Will it completely separate from the global compliant Web3 market into two parallel tracks next year? Previously, global Web3 was a no-man’s land, which may account for 80% of the entire market.After becoming compliant in Hong Kong, the compliant market may surpass the non-compliant market.Web3 will no longer grow wildly, but will become more inward-looking. However, the quality and success rate of projects will be higher.The second question today is, what is the latest impact of Hong Kong’s new compliance policy on the market?
Loki : There is one thing that needs to be clarified. No matter at what stage, compliant markets and non-compliant markets will inevitably exist. The so-called compliance or non-compliance is actually not necessarily related to DeFi, Web3 or traditional transactions. This logic can also be used to analyze the new policy of Hong Kong on June 6.
One thing we need to note is that Hong Kong has always emphasized thatSame business, same risks, same rules"Let's look at a policy.On the one hand, it is its regulatory policy, and on the other hand, it is its industrial policyIndustrial policy is what encourages you to do, while regulatory policy is what tells you not to do.
The new policy on June 6st actually has the greatest significance in terms of supervision. To put it bluntly, it tells everyone what not to do, because in the past, a very serious problem in the entire encryption market was the high unpredictability of policies.The unpredictability of policies actually causes great harm to the market.Although many people say that the best regulation is no regulation, and that wild growth is the best, the significance of regulation is to provide a clear boundary and tell everyone what can and cannot be done from the beginning. This is the greatest significance.
Bai Lu just mentioned, is it possible for something new to emerge in Hong Kong? I think there will definitely be. First of all, from Hong Kong's past experience, in the absence of any industrial and regulatory policies in the past, unicorn companies in the fields of FTX, biomedicine and artificial intelligence were born. So Hong Kong itself has the gene of scientific innovation.
Secondly, when considering whether an industry can be established, another important point is the market size. When people discuss where the future of Web3 lies, there are basically only two answers in general: either in the United States or in Asia, especially in East Asia. Europe is also possible, but the probability is much smaller than that of the United States and East Asia. The decisive factor lies in the market behind it. The United States is backed by the markets of developed countries in Europe and America, and Hong Kong is backed by the entire East Asia region, including mainland China, Japan, South Korea and Southeast Asia.
In addition, one benefit of the new Hong Kong policy is that after clarifying the border, it will be a great benefit in terms of talent inflow. From what I have seen, as long as it is not illegal in Hong Kong, everyone is very willing to go to Hong Kong.Hong Kong itself has very good systems, a good scientific and innovative gene, universities, a Chinese cryptocurrency circle backed by the mainland, and the entire Southeast Asian market. Combining these factors, there is a great opportunity for new businesses and innovative projects to emerge in Hong Kong.
Tony : Hong Kong's regulation is "same risk, same business, same regulation", which has been consistent since 2017.Integrate the past policies and open them to the market in a unified way. I agree with what Chairman Bao said just now. Supervision itself does not create profits. Supervision never considers whether a company is profitable. For regulatory agencies, they wish everyone did nothing every day and just filled out forms to comply with regulations.
However, the extent to which a specific business will be advanced and the extent to which it will comply with regulations are not actually black and white, and there is still a lot of room for maneuver.This is also the view of many people in the Hong Kong industry. They think that if only limited mainstream currencies are allowed, and even stablecoins are not allowed, is it still a profitable business?
I am an NFT developer myself. Invest Hong Kong has repeatedly said in the media that NFT is not regulated by the SFC in Hong Kong. If a regulatory policy is issued in the future, it will give everyone a year to apply for a license. Hong Kong will not shut down any Web3 company without reason and say that anything is allowed unless prohibited. We also believe that we will cooperate with companies that hold VASP and other licenses in the future to explore win-win opportunities.
Tony Tang : I would also like to add that the new Hong Kong policy starts from June 6st, and there are 1 months to apply for a license. If you have not applied after that, you must withdraw. In fact, there were many projects that issued coins before, such as 9co, ido, and ieo. Now the rules have been clearly defined.If you want to issue coins legally in the future, the threshold will be very highSTO requires a 12-month operating record. Other methods of issuing coins are very, very difficult. In the future, we will see that there will be very few ICO and IEO projects in Hong Kong after 9 months.
Batman : Hong Kong OSL wanted to list an ICO coin, but was forced to remove it by the Hong Kong government. Therefore, 1CO is definitely not within the framework of the Hong Kong government’s new policy. The Hong Kong government’s new policy framework can be divided into three parts: the first part is to clarifyHong Kong dollar stablecoinOr a series of other crypto stablecoins, an opinion must be issued before the end of 24 years. The Hong Kong government is currently exploring the Hong Kong dollar stablecoin, or the central bank digital currency.
The second part is the exchange. The compliant exchanges represented by OSL had HK$2 billion in assets in February, which means that the average number of daily traders may not exceed 20, and the income is barely enough to support. The survival situation of truly compliant exchanges is actually relatively poor. In the end, they may be like Coinbase, unlikely to provide other trading services, and be in a relatively embarrassing position like Grayscale Bitcoin.
The third part is,There is no real legislation and supervision yet, such as NFT and DeFi systems., especially contract exchanges and financial derivatives exchanges, which may eventually find it difficult to follow the path of compliance. This is actually the biggest problem. According to the previous experience of the Hong Kong government in exploring payment licenses, the first batch of payment licenses released at that time was not based on compliance with the rules, but on the two largest companies, Alipay and WeChat. From the Hong Kong government's experience in governance, it is indeed possible that the first batch of licenses will not exceed 10, or even about 5.
Bao Yu : For entrepreneurial team project owners, what will the situation be like if they want to issue tokens for financing in Hong Kong?
Tony Tang : There were many ICO projects in Hong Kong before. The common practice at that time was to hire a Hong Kong lawyer to write a legal opinion saying that the project was a utility token, which would not involve the Hong Kong Securities and Futures Commission. The Hong Kong Securities and Futures Commission said at the time that only things related to securities were related to him.
Now that the new policy has been issued, many things are regulated by the Hong Kong Securities and Futures Commission, including Bitcoin and Ethereum. The Hong Kong Securities and Futures Commission defines virtual assets asHowie Test of the SECThat is, if a project is jointly invested by everyone to gain benefits, it is a security token, regardless of whether a lawyer has previously said it is not a security token. In the eyes of US regulators, except for Bitcoin, which is not a security token but an application token, all others have securities attributes. According to this definition, most of the coins issued in the future will be securities, and it is difficult to prove that they are application tokens.
My view is that in the future, the US Securities and Exchange Commission and the Hong Kong Securities and Futures Commission will define a large number of tokens as securities, requiring 12 months of operating records and financial statements, a bit like a small IPO. Starting from June 6, everyone can do it freely within 1 months, and then everyone will either leave Hong Kong or comply with Hong Kong laws.
Bailu : Let me share my opinion. Hong Kong compliance is still an innovative thing. Compared with the traditional mainstream world, Hong Kong compliance is a shorter path for a project from entrepreneurship to financing than traditional IPO. After all, this is aA revolution in underlying economic relationsPeople who hold the tokens of these projects can still have some opportunities for alpha gains. However, it may not grow as wildly as in the past few years.
I even guess,Maybe a native Web3 project will first be listed on a non-compliant, unlicensed exchange.After operating for a period of time, the Hong Kong Securities Regulatory Commission believes that it has become relatively stable and has gradually opened a whitelist to the top 100 tokens in non-licensed exchanges. This is also a step-by-step approach.
Tony Tang : If there is no compliant exchange, you can’t operate in Hong Kong after 9 months. The Hong Kong Securities and Futures Commission, like the United States, is very cautious about all projects involving financing and listing. Their role is to protect investors and try every means to avoid losses to investors. Small projects can do research and development in Hong Kong, but if they want to be listed on a compliant exchange, the threshold is very high.
There are several real estate data center projects that want to do STO, and the cost alone is several million US dollars. In the future, it is possible that the cost of STO listing on Hong Kong compliant exchanges will be reduced from several million US dollars to 10 US dollars.
Bao Yu : Why does it cost millions of dollars to do STO for a real estate project?
Tony Tang : We consulted OSL and hashkey for quotes, and the fees included consulting fees, approval fees, legal opinions, and various other fees. Their costs were too expensive. If you don't have $100 million, you can't make money.
Loki : Let me give you a brief introduction to the situation in Japan. Since Japan complied with regulations relatively early, it is relatively meaningful for reference.Compliance Transactions in JapanPlaceThere are probably about 66 or 20 of them now. But many people don’t know that the entire Japanese compliance market currently supports very few types of cryptocurrencies, only 200 in total, and perhaps 40 of them are native Japanese tokens that have basically never been listed on exchanges in other regions. There are only about XNUMX of the top XNUMX mainstream cryptocurrencies that we are familiar with.
That is to say, the so-called compliant market is not suitable for all projects.Generally speaking, there are actually two options: one is that although I start a business in Hong Kong, I will not issue coins in Hong Kong, or if I issue coins, they will not be oriented to the compliant market in Hong Kong. The second is that I want to issue a security token, which needs to follow the guidelines and rules of the Hong Kong government, and I also need to think about whether it makes sense to issue coins in Hong Kong?
Personally, I think compliance in Hong Kong is of great significance. However, whether from the perspective of exchanges or projects, issuing coins in compliance in Hong Kong is not suitable for every project; for exchanges, not every exchange needs this license, and not every exchange needs to enter this market.
Bao Yu : Hong Kong does not seem to have a clear compliance framework for non-security tokens in ICOs. I asked Xiao Feng, and he said that Hong Kong only has a relatively strict law for crowdfunding, and the primary issuance of Coinlist to uncertain objects is similar to crowdfunding.
Tony Tang : What is a security token? What is not a security token? This was pioneered by Howie Test in the United States. The US Securities and Exchange Commission is constantly challenging ICO tokens, and the Hong Kong Securities and Futures Commission will follow suit.
Bao Yu : The underlying logic of the United States is that there are only securities in the world, because it involves financing. As long as I judge that you are a security, I can arrest you and beat you up. This is the logic of the Americans. Hong Kong still recognizes virtual assets, which is different from the logic of the United States. The United States has now become such a conservative logic, and China has not fallen into the state of fighting between the left and right hands like the United States.
Tony Tang : I would like to add that, in fact, compliant exchanges such as Coinbase in the United States are more open than those in Hong Kong. The number of tokens they list is much higher than that allowed by the Hong Kong Securities Regulatory Commission. The cost of listing STO in the United States can be done with tens of thousands of US dollars. The listing price in Hong Kong is expensive even for Americans, so many Hong Kong projects now want toGo to the United States firstThe country will issue the currency, and thenReturn to Hong Kong.
Bailu : It is a path. Compliance is good, whether it is assets or projects, it will always be more stable. But we also have to consider the cost of compliance, because entrepreneurship is about making money. If the threshold is too high in the early stage and too few people come in, the industry will not develop.Moving on to the third topic tonight, before the Bitcoin halving in April next year, will the Hong Kong compliance accelerate the bull market of Web4? Are there any new trends?
Tony : Just now, a guest mentioned that the next round of Hong Kong bull market needs old money to enter the market, but old money has been waiting and watching. Because old money sees this brand-new industry and cannot find certainty. For old money, there are many targets to invest in. Investing in a listed company may be better than listing a coin. First, it is simple, and second, they are familiar with it.
The entry of old money is definitely a factor in the bull market, but I don’t think old money will enter the market soon in this wave.Today is June 6st. We originally thought that there might be a bull market this time, but now it seems that this may not be the case. It is even very likely that Bitcoin will return to the 1s.
Bailu：There will definitely be new money entering the market in every bull market. For this wave of old money, are we expecting old money from institutions or old money from retail investors?
Bao Yu : Hong Kong’s capital still has its investment preferences. The easiest way to understand it is the platform rental model.This is closely coupled with Hong Kong's real estate model. For example, Tencent's market value reached 7 trillion Hong Kong dollars when it was listed in Hong Kong, because Hong Kong's capital market understood that Tencent is the world's largest Internet developer, a platform for collecting rent, and has monopolized the largest traffic center. Tencent has also reaped the capital dividend in Hong Kong.
However, Hong Kong capital does not understand technology companies very well, which makes it inferior to Nasdaq. It cannot give pricing for technology companies. This was a feature of Hong Kong capital in the past, and it may also be a problem. This requires a change in perception. In fact, the problem in Hong Kong is not about money, but about the perception of managers and the GPs and LPs behind them. I think the financial team of the Hong Kong government is eager to develop the crypto market, but it needs to form an overall linkage.
Bailu : I have seen a data before.Traditional capital markets have 3% of fundsTo allocate Bitcoin, the crypto market is also booming. Because the market value of the crypto market is only more than 1 trillion, and the traditional capital market is nearly 3 times the size. As long as traditional capital shows a little XNUMX% to the crypto market, the market capacity will double.
Tony Tang : I think old money will enter the market. In fact, the last wave of the metaverse craze and NFT craze,The four major families in Hong Kong, such as New World Group, have participated in the investment., invested in OpenSea, Boring Ape, etc. But many of them lost money because NFT collapsed and fell by 90%. After the new encryption policy in Hong Kong comes out, more family offices and traditional listed companies will enter the market. If the bull market comes next year, compliant investors will come in.
Loki : Let me share my opinion. First of all, we need to clarify whether the new Hong Kong policy will bring about the needs of retail investors or institutions.Personally, I am not optimistic about the retail market.First, Hong Kong is relatively open to retail investors. The size of the entire Hong Kong market is still somewhat different from that of the US market. We have previously made a calculation for Hong Kong, and the size of the entire futures ETF and Grayscale trust fund will be within 10 billion US dollars, which is not much compared to the entire crypto market value of 11000 trillion.
In addition, retail investors face the problem of cost when trading directly. The cost of compliant exchanges is very high, and the fees are not low. For example, Coinbase charges 1%-3%, but the fees of mainstream exchanges such as Binance are usually within 1/1000. Retail investors who are not very sensitive to compliance will still tend to use overseas exchanges. Therefore, I am not optimistic about the impact on retail investors.
What does old money need?First of all, there must be a clear expectation that old money will definitely not invest in new projects, but will buy BTC safely through compliant exchanges, so that the finance and audit can be acceptable. Secondly, it is in a way that it can control. Whether it is a compliant exchange, a grayscale model, or a futures ETF model, it is actually facing more old money. In addition to the secondary market, investment in the primary market is also very important for old money. Because if you only look at the secondary market, old money is more inclined to invest in BTC or ETH, and the possibility of participating in the configuration of cryptocurrencies outside the top 20 is relatively small. Another thing is to invest in funds. There is an implicit problem here, that is, the No. 9 license will also be underestimated to a certain extent, and VASP will be overestimated to a certain extent.
Based on these two points, I think that old money will definitely come in, and the impact of coming in will be much greater than that of retail investors, but this is a continuous process of influence, and it is impossible to take effect within 1 or 3 months. At least it will take half a year to a year for this effect to appear, and at that time it may become one of the driving factors of the bull market.
Bailu : The fourth question tonight is, as market participants, how should institutions, retail investors, exchanges, etc. seize this historical opportunity?Please ask the guests to talk about their own layout in this wave in Hong Kong from their own perspectives.
Tony : We hope that more people will go from not understanding the new policy in Hong Kong to starting to turn their attention to the crypto industry. This is a major significance of the new policy. It is equivalent to the government helping the crypto industry to do a huge BD, which is an important factor in the next bull market.
As for investment advice, it may still be Bitcoin and other major currencies. For entrepreneurial teams, it is definitely necessary to make good use of the Hong Kong concept. At the end of October last year, after hearing the Hong Kong New Deal Declaration, we immediately registered NFT China in Hong Kong in November. Many people said that the name was well chosen and politically correct. Facts have proved that we have indeed become the first NFT platform in mainland China to go overseas.
Bailu : NFT was equivalent to acting as a carrier for new traffic to enter the market in the last bull market. Originally, the digital collection and overseas NFT markets were separated from each other. Hong Kong actually integrated the original domestic digital collection 2.5 market with the overseas Web3 NFT market.
Bao Yu : In fact, my biggest idea for the new Hong Kong policy is to use this new environment to launch some core, innovative, and technical projects and platforms. My view on Web3 is,Web3=Blockchain+AI+DataThere will be many opportunities here. I hope that this time there will be a chance to come up with a phenomenal new technology in one or two years.
In the past six months, I have also communicated with some senior people in Hong Kong, and they gradually have this view. In the past, Hong Kong was a free port, and the wealth effect of its financial center was the collision of money from the mainland and Europe and the United States. This may have changed, and the wealth effect of global finance is receding. But digitalization will not. This is one of the two major trends that will not be reversed in the world, and the other is carbon neutrality. These two trends may not be reversed in the next few decades.
Loki : I have three opinions. First,The opportunity in Hong Kong is not a leapfrog opportunityIt is impossible for a lot of money and people to suddenly pour in overnight, but it will be a gradual process. Personally, I am not optimistic about the so-called Hong Kong concept projects now. These projects just found a concept suitable for speculation under the previous state of ample market liquidity.
The first real Hong Kong concept should be BTC, because Hong Kong's policies revolve around one thing, which is compliance, and the first thing to comply with is BTC. Whether it is an exchange or asset management, the first thing is to let everyone configure BTC. After completing the configuration, you may need to provide BTC custody services. The Hong Kong Securities and Futures Commission's guidelines on May 5 also proposed that the trading function and custody function of virtual asset exchanges should be separated in the future. This also implies an opportunity, that is, not only providing compliant transactions, but also providing custody. Therefore, the first opportunity is BTC, whether you buy BTC yourself or provide some services around BTC.
The second opportunity is that it is suitable to start a business in Hong Kong. Now there are indeed a lot of entrepreneurs and funds gradually increasing their layout in Hong Kong. Compared with going overseas, the cost of living and living habits in Hong Kong are more acceptable to everyone, which will greatly reduce the cost of starting a business. For individuals, Hong Kong's education and medical care are also attractive. Based on these two points, whether for projects or individuals, it may be very suitable to start a business in Hong Kong in the next few years.
The third opportunity is a derivative opportunity. I have been in Hong Kong for a long time recently, and I found that many intermediary services provide talent applications, financial services, and legal advice. They are also very concerned about the new crypto policy. For new companies, some localized support is definitely needed.
Tony : Let me add a little bit. According to my observation, many companies still want to use Hong Kong as a temporary residence and only put two or three market BD positions online. The cost of living for the team is significantly higher than that in Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou in mainland China. There is no motivation to work in Hong Kong, and there is no sense of happiness at all.
Bailu: What does the future Web 3 world look like in everyone’s mind?
Loki : I think we need to understand the trend of the crypto industry.Post-FTX Era, there is a particularly obvious trend, that is, some development trends previously led by institutions are gradually dying out, and returning to technology construction, demand-driven and user growth. In other words, the entire industry has returned to a normal development context, focusing on the most core application scenarios and application needs. In the past six months, the market has only believed in real data, and it is definitely not okay to paint a rosy picture for VCs. This is my most intuitive feeling.
User growth is definitely the most pressing issue to be addressed in the next one to two cycles.My solution includes two aspects. First, we need to take root in the most basic technology to provide a very solid foundation for the entire ecosystem. The previous mainstream narrative was to create a more efficient blockchain solution around the spillover needs of Ethereum. A more feasible way in the future is to create a network status management solution around Ethereum. One direction is Ethereum's Layer2, Layer3 or app chain, and the other direction is zkEVM and modular layer. These basic technologies are added together to eventually build a complete blockchain solution.
I have always held the view that the final development trajectory of Web 3 will converge with the Metaverse at the end point. Eventually, Web3 will become the Metaverse, and many Web3 elements will be interspersed in the Metaverse.
Randal : I am not sure whether the implementation of the new Hong Kong encryption policy can bring a new bull market to virtual currencies.But for cloud service providers, it will definitely bring a new bull market. Because exchanges and asset management companies are newly built after entering the Hong Kong market, it is not a replacement of existing stocks, so it brings us a huge market. Compared with Dubai, Hong Kong emphasizes compliance and security more, and we also have supporting compliance and security solutions. From the perspective of competition, we believe that competition in the cloud service field in Hong Kong will definitely intensify, which is also a battleground. As a challenger, Huawei Cloud's entry into the Web3 field will definitely bring more competitiveness to Hong Kong's cloud service market.
In fact, I am still optimistic about the recently discussed Worldcoin project, and I am particularly optimistic about its business model. If Worldcoin is to achieve universal support, it is best for the government to play this role. Hong Kong also supports Web3 and has AI, so it is completely possible to set up a Hong Kong-basedhongkong coinThe AI computing center based in Hong Kong refers to the business model of Worldcoin to provide everyone with a universal payment support.
Bailu : Let me summarize. Whether it is Web3 or the future of the Metaverse, we still need to lay the foundation in our respective fields and do our best. For example, what is Web3 to the traditional world? What core problems does it solve that other technologies cannot solve? Each technology finds its own suitable scenario in the field it focuses on.Everyone builds first, and then when the boundaries are almost merged, everything merges into a metaverse., this is my overall logic.
I am stillI hope Hong Kong can serve as a bridgehead for the most radical economic development in China.In the next 30 years, China will be the first. Hong Kong will take up the banner of Web3 and fight against the United States and Silicon Valley. Although there is no bias from the technical and economic perspectives, as a Chinese, I still hope that Hong Kong can rise.
"Bai Lu Living Room" is a Web3 online interview column. The initiator Bai Lu invites a number of Web3 practitioners in each episode. In the form of a roundtable, he interprets industry policies, analyzes market conditions, shares alpha opportunities, etc. with the guests.Let investors perceive industry trends up close and obtain the latest information.Bai Lu graduated from the Central University of Finance and Economics. He is a well-known KOL in the Web3 industry. He also serves as co-chairman of the Asian Metaverse Alliance, vice chairman of the Hong Kong Blockchain Association, and executive vice president of the Shenzhen Information Industry Blockchain Association.