HK's finance chief reiterates 'appropriate regulations' needed for cryptocurrency and DeFi

Hong Kong’s finance chief Paul Chan has reassured citizens that the city will develop its Web3 industry under “appropriate regulations”, implying more oversight of decentralised finance (DeFi) apps at the latest Web3 Festival which launched on Wednesday.

Chan said in an opening speech at the festival that the premise of Web3 development is that the stability of the financial system and investor protection should not be damaged, “I believe that everybody has learned from recent events that appropriate regulations are a must to create a sustainable development environment and a more ideal space for development,” he added.

With the rise of blockchain technology, many people believe that the Internet has entered the Web3 era, Chan said. “The immediacy, transparency, efficiency, disintermediation, and decentralisation of blockchain technology break the situation that the original data and information are controlled by specific Internet platforms. The data will be jointly owned by the builders and users, making the Internet "decentralised" .

In fact, with the rise of Web3, many people are gearing up and looking for new opportunities; but at the same time, many people are taking every step, worrying that the future development will be uncontrollable, he said.

“In my opinion, whether it is at the macro level or at the level of individual enterprises, the key to the real success of Web3 is to better serve the needs of the real economy and the market, and use innovative technologies, models and applications to solve long-standing pain points, The difficulty is to improve efficiency, create a better experience, create new value, and a new model. This can be an improvement on the old basis, or it may be a ‘disruptive creation’,” he added.

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This comes as the Securities and Futures Commission (SFC) launched a public consultation over plans to allow retail investors in Hong Kong to purchase big-cap cryptocurrency tokens such as bitcoin and Ether back in February.

According to an official release from the SFC, its proposed regulatory requirements for virtual asset trading platforms are based on the regulatory requirements of the existing regime under the SFC and are comparable to those for licensed securities brokers and automated trading venues. The SFC has also taken the opportunity to propose modifications to some requirements of the existing regime. The consultation period for the policy will end on 31 March 2023.

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