Crypto Bosses Look To China Ahead Of Hong Kong Rules

Cryptocurrency bosses have said they see promise for the future of the industry in China with the recent release of a white paper on Web3 days before Hong Kong introduces a new regime of crypto regulations on Thursday.

While cryptocurrencies are illegal on the Chinese mainland, Hong Kong is introducing a licensing regime on 1 June that is to allow retail investors to buy crypto-tokens with large market capitalisations, such as Bitcoin and Ether, on centralised exchanges that have registered with the Securities and Futures Commission (SFC).

The SFC is preparing a licensing regime for stablecoin-related activities by 2024 and has also suggested decentralised finance (DeFi) platforms should be subjected to more oversight.

‘Web3’ in China

Meanwhile the Beijing Municipal Science and Technology Commission on Sunday published a white paper that includes coverage of Web3.

Web3 is a loose term that envisions a next-generation internet powered by decentralised technologies such as blockchain, which also powers cryptocurrencies. As such the term Web3 is often used to refer to crypto.

The Beijing white paper includes Web3 in its discussion of “Internet 3.0”, along with “metaverse” virtual worlds and artificial intelligence – but makes no specific mention of cryptocurrencies.

“Internet 3.0 is a three-dimensional space that blends the virtual with reality, with highly immersive and interactive experiences,” says the document, titled “Beijing Internet 3.0: Innovation and Development White Paper”, noting that this assessment covers elements of the metaverse as well as Web3.

Hong Kong crypto

The white paper also discusses areas such as next-generaiton semiconductors and brain-computer interfaces.

Binance founder Zhao Changpeng, known as “CZ”, published photos of the whitepaper on Twitter on Sunday, noting that the paper comes just ahead of the new Hong Kong crypto rules.

“Interesting timing on this Web 3.0 white paper from the Beijing government tech committee with the June 1st anticipation in Hong Kong,” he wrote.

The post received widespread interest in the crypto community, with 2.6 million views by Tuesday.

Crypto enrepreneur Justin Sun retweeted the post, saying China’s “commitment” to Web3 “reflects a significant step towards recognising the transformative potential of decentralised systems and blockchain-based solutions”.

‘Significant step’

Yat Siu, who founded blockchain unicorn Animoca and operates metaverse platform The Sandbox, said on Twitter that the white paper was released to “promote the #web3 industry after Hong Kong had already started promoting it 6months ago” when it began developing crypto regulations.

Siu told the South China Morning Post that he believes the Beijing and Hong Kong measures are a reminder that Hong Kong is “a financial centre that acts as the financial intermediary and gateway in [and] out of China”.

He added that “digital assets will work the same way” and that he believed Hong Kong would “experience a talent and innovation boom” in Web3.

Siu and Zhao are both embroiled in legal battles with regulators in the US, where authorities are currently seeking to apply existing financial rules to the crypto industry in the absence of a custom-made regime.