Creator: Yue Xiaoyu(*10*)
Hong Kong’s blockchain trade was booming earlier than, but it surely appears to have lately come to a standstill.(*10*)
What’s the present state of the cryptocurrency market in Hong Kong?(*10*)
I have been dwelling in Hong Kong lately, and I have been speaking ceaselessly with many pals and tasks there. I’ve progressively gained a clearer understanding of the regulatory surroundings and coverage traits for Web3 in Hong Kong.(*10*)
This may be summarized into 10 factors.(*10*)
1. To sum it up: I’m pessimistic about the improvement of Hong Kong’s Web3 trade in the quick to medium time period, however optimistic in the long run.(*10*)
2. The pessimism in the quick to medium time period stems from the repeated shifts in regulatory insurance policies and the inside battle between totally different views.(*10*)
It is not simply the central authorities and the Hong Kong authorities combating one another; the Hong Kong authorities’s government and regulatory departments are additionally combating one another.(*10*)
The central authorities desires monetary stability, the Hong Kong authorities desires to develop new industries, the government department desires to innovate, and the regulatory department desires to be conservative.(*10*)
Essentially the most elementary contradiction lies in the indisputable fact that the decentralization and world liquidity of blockchain are inherently mutually unique with the authorities’s sturdy overseas change controls and restrictions on capital outflows.(*10*)
3. Long-term optimism stems from the irreversible development and the real worth of stablecoins, which symbolize a major transformation, particularly for cross-border commerce and funds.(*10*)
In the meantime, the United States is accelerating laws for the cryptocurrency trade, seizing legislative energy and dominance. Eventually, different nations and areas will probably be pressured to “open their doorways”.(*10*)
It is simply that it isn’t time to decide but, so we are able to nonetheless waver and wait and see. However the longer we delay, the extra passive we are going to grow to be.(*10*)
After all, it can’t be denied that Hong Kong has at the very least taken a vital step and opened a door, which may then be progressively expanded.(*10*)
Extra importantly, Hong Kong stays China’s window to the exterior world, or monetary backdoor. It might have been closed slightly or tightened management, however this window should stay.(*10*)
4. The primary part of Hong Kong greenback stablecoin licenses will solely be granted to native consortia, with a most of 5 licenses.(*10*)
The core cause why JD.com and Ant Group withdrew their functions for stablecoin licenses is that the Chinese language authorities is worried that these expertise firms are too giant and the dangers are troublesome to handle.(*10*)
After all, for tech giants like JD.com and Ant Group, if Hong Kong would not subject licenses, they will apply in different areas.(*10*)
As a metropolis with a inhabitants of seven million, Hong Kong’s market dimension just isn’t that giant, however tech giants nonetheless have to have interaction in stablecoin enterprise.(*10*)
5. It’s unlikely {that a} Hong Kong greenback stablecoin will probably be launched, not solely due to licensing points, but in addition as a result of the largest impediment is the restriction on the scope of enterprise underneath strict danger administration.(*10*)
For instance, one in all the largest limitations of Hong Kong’s present stablecoin coverage is that finish customers should endure KYC (Know Your Buyer) procedures.(*10*)
Which means Hong Kong greenback stablecoins don’t have any secondary market and may solely flow into inside the whitelist of addresses.(*10*)
This was truly meant to additional restrict the scope of danger, but it surely additionally sacrificed the usability of stablecoins, in the end changing into a Hong Kong model of the “digital yuan”.(*10*)
6. Whereas Hong Kong greenback stablecoins usually are not viable, RWA has nice potential!(*10*)
Hong Kong’s regulatory logic is to implement tiered regulation based mostly on the underlying property.(*10*)
Stablecoins are based mostly on fiat foreign money, so they’re topic to the highest regulatory necessities.(*10*)
Secondly, RWAs with underlying monetary property could also be categorized as securities.(*10*)
Lastly, RWA, which relies on bodily objects, has the lowest regulatory necessities.(*10*)
7. At the moment, there are a lot of RWA tasks based mostly on bodily property, however only a few RWA tasks based mostly on monetary property.(*10*)
Nevertheless, RWA based mostly on monetary property is much superior to RWA based mostly on bodily property, as a result of bodily property want to be financialized earlier than they are often tokenized, which is an extended, expensive and low-return course of.(*10*)
The present lack of transparency in bodily asset RWA is simply too excessive. The bodily asset portion is mainly a black field, and most tasks are both simply using the wave of the idea or suspected of cash laundering.(*10*)
8. I used to assume that high-quality property in the conventional monetary world have been scarce and can be snapped up.(*10*)
Nevertheless, after speaking with the RWA startup staff, I spotted that high-quality property in the conventional monetary world nonetheless lack funding sources. It may be mentioned that high-quality property outweigh the quantity of capital.(*10*)
The worth of tokenization lies in its means to decrease the barrier to accessing funds.(*10*)
9. The evolution of RWA nonetheless follows this path: fiat foreign money on-chain -> bonds on-chain -> shares on-chain -> monetary derivatives on-chain -> bodily property on-chain.(*10*)
Placing fiat foreign money on the blockchain has too excessive regulatory necessities and isn’t one thing small companies can take part in;(*10*)
Bodily property that aren’t high-quality property are put on the blockchain; as soon as they’re on the blockchain, they’re now not high-quality property.(*10*)
The on-chaining of normal monetary merchandise in the center part has huge potential, actually fixing the issues of inadequate funds on the asset aspect and inadequate property on the funding aspect.(*10*)
10. Do not attempt to guess the regulator’s perspective; you may solely lose badly.(*10*)
this subject from one other perspective: the lack of clear and efficient regulation truly serves as a safety and barrier for present cryptocurrency practitioners.(*10*)
If we wait till the laws are literally applied and huge firms rush in, what alternatives will we’ve got?(*10*)
So now is a good window of alternative.(*10*)
Alternative favors the ready thoughts; those that waver withdraw, whereas those that are decided seize the time to construct. The highway to success isn’t crowded.(*10*)
As soon as the expertise and merchandise are prepared, we are able to go all out when the regulatory authorities give the beginning gun.(*10*)
The premise is that trade practitioners should consider in the trade and that the tasks they’re working on are genuinely addressing market wants and issues.(*10*)
