Wu told the Hong Kong Investment Promotion Bureau: Hong Kong naturally has the advantage of developing Web3 and Crypto Assets

Interviewee | Mr. Leung Hon King, Chief Executive of the InvestHK Financial Service, Technology, and Sustainability Global

Edit | Wu said blockchain

Mr. Liang Hanjing leads the Financial Service and Technology, Sustainable Development team of the Invest Hong Kong to attract international and Mainland Financial Service, Technology, and Sustainable Development companies to Hong Kong to assist in enriching the financial ecosystem. Before joining the government, Mr. Liang Hanjing was a technology company founder, angel investor, and fintech lecturer. Mr. Liang Hanjing's first data-related startup company was established through an early investment by Credit Suisse. His company directly serves many well-known financial institutions, including wealth management, insurance, consumer finance, and more. Mr. Liang Hanjing has also worked as a management consultant at Booz Allen & Hamilton and KPMG in the United States, as well as an investor in the technology fund Innovate@ jointly operated by Booz Allen & Hamilton and Lehman Brothers. Mr. Liang Hanjing holds a Master of Business Administration (Honors) from the University of Chicago and a Bachelor of Mechanical Engineering (Honors) from the University of Wisconsin-Madison.

Question: What work is the Invest Hong Kong currently responsible for in the web3 field

Answer: First, investment promotion. Our core responsibility is to attract and support companies entering the Hong Kong market. Our target clients include those interested in the Hong Kong market.

Mainland and international enterprises, covering enterprises from mainland China, the United States, the United Kingdom, and other countries, as well as entrepreneurial teams of Chinese descent. We assist these enterprises in landing in Hong Kong and connecting with relevant resources.

Second, industry promotion and event support. We actively participate in and sponsor various industry events, such as the Consensus conference, where we are one of the sponsors. In addition, we host or support large-scale industry events, such as the 'Hong Kong FinTech Week,' which is also one of the projects our team is responsible for. Through these activities, we hope to provide a platform for communication and development for enterprises and industry leaders in the fields of Web3, virtual assets, financial technology, and blockchain, attracting more related companies to enter Hong Kong.

Third, policy feedback and industry communication. As our daily work is closely related to enterprises, we can understand the latest industry trends and actual needs of enterprises for the first time. Therefore, we also play a 'market feedback' role within the government, often communicating with colleagues responsible for policy making and supervision, conveying the voice of the market to decision-makers and regulatory agencies, ensuring that policies can better meet the development needs of the industry.

In addition, as a government's propaganda and promotion platform, the Investment Promotion Agency also undertakes the role of industry promotion. We hope to use our promotional resources to let more people understand important industry dynamics, such as the landing of international conferences like Consensus in Hong Kong, demonstrating Hong Kong's potential as the center for Web3 development in Asia.

In addition, we are also responsible for docking industry resources. For example, if Consensus needs to establish an ecosystem in Hong Kong or seek cooperation with the government and private enterprises, we can leverage the Investment Promotion Bureau's in-depth understanding of local resources to provide them with effective docking support and facilitate more cooperation opportunities.

Question: Has Hong Kong's support for web3 undergone a change

A: In fact, Hong Kong has always been very supportive of the Web3 field, and the reason behind it is also very simple. Hong Kong is a free market where capital can flow freely, and its economic system itself is very suitable for the development of transnational, borderless industries such as cryptocurrencies and Web3. Essentially, the core features of these industries are globalization and decentralization, so Hong Kong naturally has the advantage to develop these industries.

The Investment Promotion Agency has been paying attention to this emerging industry for a long time and has been providing support. At the same time, as mentioned earlier, we collect industry feedback in our daily communication with companies and convey market demands to policy bureaus and regulatory agencies, hoping that policymakers can timely focus on industry trends. Therefore, our support has always been continuous and stable.

Q: Does the Investment Promotion Bureau belong to the sub-agency of the Policy Bureau?

A: The Investment Promotion Bureau is subordinate to the Commerce and Economic Development Bureau and often collaborates with other policy bureaus. Senior officials of the policy bureaus need to consider the overall interests and long-term development of the entire Hong Kong from a global perspective, while the Investment Promotion Bureau is at the forefront of the market and can more quickly observe the development trends of emerging industries.

The role we play is more like a 'Market Intelligence Hub,' collecting industry dynamics through daily contact with companies and feeding this information back to relevant government departments to help them better formulate policies.

Q: How do you currently support local businesses?

A: The companies we support are not limited to local companies, but also include companies with overseas Chinese or international backgrounds. Their needs are mostly focused on customer expansion. For example, some Web3, virtual asset, or blockchain-related companies, if their target customers are banks, direct access is often more difficult, especially for companies that have just entered the Hong Kong market.

For example, suppose a well-known Swiss blockchain company has just entered the Hong Kong market. If they were to contact local banks on their own, it might take a long time to establish trust and cooperation. However, if this company goes through our Investment Promotion Agency, we will conduct background checks first to ensure their good reputation, and then directly make precise recommendations and connections to relevant large banks or financial institutions.

The same logic also applies to investment institutions in Hong Kong, such as Venture Capital and government-backed funds. We will help companies find suitable investors or partners more quickly, improve matching efficiency, and accelerate the landing and development of enterprises.

Q: Do you have any impressive corporate cases?

A: The actual application of blockchain technology is crucial to the entire Web3 and virtual asset industry, especially in cooperation with regulatory authorities. For example, the Hong Kong Monetary Authority (HKMA) initiated Project Ensemble last year, which is a highly influential initiative aimed at promoting the development of RWA (Real-World Assets).

The project has attracted not only large banks and technology companies to participate but also opened pilot projects and sandbox testing to international innovation institutions. However, many overseas companies may not necessarily know how to join or connect with the relevant person in charge, even if they are aware that HKMA has launched this project. Due to the large scale of HKMA, it is not easy to find the right contact person.

In this scenario, our Investment Promotion Agency played a key role - helping these overseas companies connect with HKMA officials, enabling them to smoothly join Project Ensemble, thereby promoting the development of the entire industry. Last year, this project made significant progress, also reflecting our significant role in promoting industry cooperation.

Question: Will companies that issue ICO tokens be supported?

A: At present, Hong Kong's support for ICO (Initial Coin Offering) enterprises is cautious and has certain thresholds. Although there is a high demand for token issuance in the market, Hong Kong regulatory authorities pay more attention to investor protection, ensuring market compliance and security.

Policy makers in Hong Kong need to find a balance between open markets and investor protection. For example, licensed trading platforms need to conduct rigorous due diligence (DD) before listing tokens to ensure the legitimacy and feasibility of the projects. Only projects that have passed through these layers of screening can be listed on compliant trading platforms in Hong Kong.

The market has a high demand for more tokens to be listed, while regulatory agencies need to ensure that the rights of retail investors are not harmed. Therefore, the development in this field in Hong Kong will be a gradual process, meeting market demands while ensuring compliance and security.

Question: Why does Hong Kong focus on the development of digital assets? For example, the stablecoin sandbox launched earlier and the Ensemble project.

A: This is actually a very reasonable choice, because Hong Kong has always been an international financial center, and digital assets are an important part of financial innovation.

When we ask everyone about their impressions of Hong Kong, many people (both Chinese and foreigners) will immediately think of it as a "Financial Center." From the perspective of the capital market, Hong Kong's market size and liquidity far exceed many competitors. For example, in 2024, Hong Kong had more than 70 companies successfully listed, with a total financing scale of over 80 billion Hong Kong dollars. In contrast, Singapore only had 4 companies listed in the same year, with a total financing amount of about 300 million US dollars, which is equivalent to 30 times the financing scale of Hong Kong.

For emerging industries, liquidity in the capital markets is crucial, and Hong Kong has a significant advantage in this respect. This is also why many global fund management companies choose Hong Kong as a base for asset management and capital operations.

In addition, the Hong Kong government is actively promoting other financial innovations, such as Green Finance. The Hong Kong Monetary Authority (HKMA) became the world's first government agency to launch a Tokenized Green Bond project in 2023, and conducted a second tokenization of green bond issuance in 2024. Furthermore, the Hong Kong government has also established a subsidy of up to 2.5 million Hong Kong dollars to encourage institutions to issue tokenized green bonds in Hong Kong.

In this background of financial innovation, Hong Kong will naturally attach importance to the development of digital assets, including launching stablecoin sandboxes, Project Ensemble, and other projects, to further promote the development of virtual assets and tokenized finance.

Question: What do you think is the development direction of Hong Kong's financial technology and web3 industry?

A: First, stablecoins and cross-border payments. The Hong Kong Monetary Authority (HKMA) has a positive attitude towards the development of stablecoins and is committed to promoting their ecological construction. The core logic behind this is that Hong Kong, as the world's third-largest financial center, focuses on application scenarios with scale effects and profound impact, rather than mere meme culture or short-term hotspots. Among them, cross-border payments are one of the most promising stablecoin application scenarios, especially in the B2B field. Many mainland Chinese exporters and e-commerce companies sell goods to emerging markets (such as Africa, South America, the Middle East, and Southeast Asia), and the existing cross-border payment systems face two main problems: long transaction times: fund transfers may take several days or even a week; high costs: payment fees in some regions can be as high as 10%, greatly increasing enterprise costs. The application of stablecoins can reduce transaction costs, speed up fund settlements, and reduce transaction risks caused by time delays. Therefore, the implementation of stablecoins in the field of cross-border payments is expected to become one of the important directions for the development of financial technology in Hong Kong.

Second, tokenization of Real-World Assets (RWA). Hong Kong's advantage in asset management makes it a key driver of the tokenization of RWA (Real-World Assets). As mentioned earlier, Hong Kong's capital markets have extremely strong liquidity, and the tokenization of RWA is a key trend in the era of asset management 3.0. By the end of 2023, Boston Consulting Group (BCG) collaborated with Invesco and AxoneChain to release a whitepaper analyzing the potential of the RWA tokenization market. The report highlights that the estimated size of just the Tokenized Funds market is as high as $610 billion. With more and more TradFi (Traditional Finance) institutions entering the Web3 space, Hong Kong is poised to become a key hub for RWA tokenization, driving the trading and management of assets such as securities, bonds, and funds on the blockchain.

Third, digital culture and Crypto Native industry. Hong Kong is not only an international financial center, but also the world's second-largest art auction market (second only to New York, surpassing London in 2020). Therefore, Web3 has enormous potential in the tokenization of digital art, NFTs, and intellectual property (IP). Digital art and NFTs: Many second-generation rich and high-net-worth individuals are extremely interested in digital artworks, and Hong Kong's international environment makes it an ideal place for the trading of digital artworks and the development of NFTs. IP tokenization: A large number of well-known IPs are tokenized through Web3 technology, making the circulation of the value of artworks and cultural products more convenient.

Hong Kong is also a gathering place for Chinese Crypto Native entrepreneurs, especially in the C-end application field. Opportunities for Chinese Web3 entrepreneurs: Many Western markets have advantages in B-end infrastructure, while Chinese entrepreneurs have accumulated rich experience in C-end applications during the Web 2.0 era, such as e-commerce, social media, content platforms, etc. Hong Kong has a friendly policy environment, abundant funds, and as an international city, it is very convenient to connect with overseas markets. Therefore, more and more Chinese Web3 entrepreneurs choose to set up international headquarters in Hong Kong to explore new opportunities in C-end applications.

Question: What important achievements has the Hong Kong fintech industry made in the past few years? How do Hong Kong's regulations and policies support the development of enterprises? How do you think these policies have promoted the growth of Hong Kong's fintech industry?

Answer: In the past few years, Hong Kong has made significant achievements in the field of financial technology, especially in virtual assets, payment technology, and financial infrastructure. The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) have successively introduced a series of policies to support the innovation and compliant development of financial technology companies. For example, Hong Kong has established a regulatory framework for virtual asset trading platforms and launched a pilot project for central bank digital currency (CBDC). In addition, Hong Kong is also promoting the compliance of stablecoins to attract more traditional financial institutions into the cryptocurrency market.

Currently, the largest stablecoin in the world is USDT (Tether), followed by USDC, and the competition between the two is increasingly fierce. USDC is favored by institutional investors in some areas due to its stricter compliance requirements and regulatory licenses. In contrast, due to the lack of comprehensive regulatory licenses, some traditional financial institutions still maintain a wait-and-see attitude towards USDT. Currently, the global trade market size amounts to trillions of dollars, while the market size of stablecoins is relatively small, not yet reaching 1.1 trillion dollars (i.e., 11,000 billion dollars). This is mainly because many enterprises are still looking for regulated stablecoins to ensure fund security and compliance. Therefore, stablecoins that obtain formal financial licenses will become an important bridge for traditional financial institutions to enter the crypto market. As a leading global financial center, Hong Kong has started issuing licenses related to stablecoins. Regulated stablecoins can not only enhance market trust but also potentially encourage more countries to adopt stablecoins issued by Hong Kong, whether denominated in RMB, Hong Kong dollars, or US dollars. This trend will drive further expansion of the global stablecoin market, potentially increasing its size by tens or even hundreds of times in the future.

With Hong Kong's leading layout in stable currency regulation, traditional financial institutions (TradFi) are more likely to enter this field, laying the foundation for the widespread application of stablecoins. The transparency of regulation and market trust will be key factors driving the growth of the stablecoin industry.

Question: In the context of intense global competition, what unique features do you think Hong Kong has that make it an ideal location to attract financial technology and web3 companies and investors?

A: The reason why Hong Kong is able to attract enterprises and investors in the financial technology and Web3 fields is mainly due to its unique international advantages, its status as a financial center, and its role as a bridge between the East and the West. Hong Kong has an international brand effect and financial reputation. Essentially, Hong Kong is a globally renowned financial brand. Even though many people have not personally been to Hong Kong, when Hong Kong is mentioned, the first thing that comes to mind is its status as an international financial center. Especially in the fields of financial technology and Web3, obtaining a financial license in Hong Kong signifies a high level of international recognition. For example: Licensed institutions in Hong Kong have high global recognition - if an enterprise obtains a license in Hong Kong, it is generally more easily accepted in other markets, enhancing its brand value and compliance reputation. Hong Kong's regulatory system is mature - in the field of digital assets, Hong Kong's regulatory framework is relatively clear, which is particularly important for Web3 enterprises and institutional investors operating in regulated environments.

Hong Kong serves as a financial hub for the Belt and Road Initiative. Hong Kong is not only China's international financial center but also an important node of the Belt and Road Initiative. Against the backdrop of intensified global economic competition, many emerging market countries in the Middle East, Africa, Southeast Asia, and elsewhere hope to strengthen economic and trade ties with mainland China, with Hong Kong playing a crucial role as a financial bridge in this process. Many Chinese companies choose to set up offices in Hong Kong to facilitate their expansion into markets in Southeast Asia, the Middle East, Africa, and beyond. Many Middle Eastern companies also establish a presence in Hong Kong to better attract Chinese companies to their markets. This two-way interaction has made Hong Kong an important hub connecting global capital, markets, and technology.

Question: Considering that you have traveled to the Middle East, Singapore, Europe and other places, do you have any new insights into the role Hong Kong should play in the global Web3 development? What unique strengths does Hong Kong have and how should it leverage its advantages to overcome challenges?

A: This is a very good question, which I have also been thinking about for many years, haha. I have been verifying this question while on business trips to different countries. In fact, there is a saying in China: 'One who is in good fortune does not realize it.' Hong Kong does have a unique advantage in the global development of Web3. Firstly, one of the key factors for success in the Web3 and crypto industry is funding, in which Hong Kong is very fortunate - a large amount of funds circulate in Hong Kong, many Web3 venture capitals (VC) are also established here, and capital is relatively abundant, which is the first major advantage.

Secondly, in addition to funding, talent is also a crucial factor, including entrepreneurs and engineers. During my business trip to Europe, I observed that the European economy is relatively mature, and many of the best entrepreneurs may have worked in large banks or financial institutions for 20 years, so they are experienced and quick-witted, but the challenge is that the labor costs are too high. Hong Kong is relatively fortunate in this regard – although the salary level in Hong Kong is not low, many of the team engineers are located in Shenzhen, Chengdu, Xi'an, Nanjing, Hangzhou and other mainland cities, while product managers and project leaders are based in Hong Kong to face the international market. This "front-end Hong Kong, back-end mainland" model is very common, and it also brings advantages in cost control and talent acquisition.

Third, another core advantage of Hong Kong is the application scenarios. Many application scenarios of Web3, Crypto, and Blockchain are closely related to Financial Service, and Hong Kong, as one of the top three global financial centers, naturally possesses unique competitiveness. In addition, Web3 also involves cultural, community, and other aspects, and Hong Kong, as an international metropolis where Chinese and Western cultures converge, has attracted numerous foreign entrepreneurs, investors, and developers. This cultural diversity has also created favorable conditions for the development of Web3.

In addition, the living environment in Hong Kong is also an important factor attracting Web3 talents. Compared to the Middle East and other regions, Hong Kong's climate and food culture are more friendly to Chinese people, with high living convenience, making it easier to attract international talents for long-term residence and development.

Of course, Hong Kong also faces some challenges in the development of Web3, the most crucial of which is not external difficulties, but whether the internal execution speed can keep up with the pace of industry development.

We have held many closed-door meetings, allowing industry leaders to have direct dialogues with policymakers and regulators. Many industry insiders believe that the attitude of the Hong Kong government is very open and willing to listen to the market, which is a very positive aspect. However, the market demands are clear, and the pace of policy implementation and regulation needs to be more in line with the market rhythm to ensure that the Web3 ecosystem can quickly take root and develop in Hong Kong.

Therefore, I believe that the core advantages of Hong Kong lie in capital, talent, application scenarios, and cultural diversity, while the biggest challenge is how to accelerate the speed of policy execution to meet market demand. As long as these advantages can be fully leveraged and continuously optimized at the execution level, Hong Kong will play an increasingly important role in the global Web3 development.