Inventory of the top ten hot words of Hong Kong Web3 in 2024

2024 is destined to be extraordinary. After three years of dormancy, Web3 finally ushered in the beginning of a new bull market cycle. A new cycle, a new narrative, what fresh blood is beating under the pulse? Let us focus on the Asian financial center and the "heart" of Asia's Web3 - Hong Kong. Over the past year, regulation, innovation and capital have advanced rapidly, allowing the entire industry to find a delicate balance between innovation and regulation.

The new narrative is intricate and complex, with hot topics emerging one after another. This article will review the top ten hot words in the Web3 field in Hong Kong in 2024 to gain a glimpse of the rise and development of the industry during the year.

1. Native compliance - "Don't take wild paths, just make clear ones"

In 2024, the whole world will be engaged in Web3 compliance, and the era of "regulatory arbitrage" is gone forever.

Different from the "open first and then repair" approach in the United States and other regions, Hong Kong has embarked on a new path of "rules first, followed by innovation". From VASP, CBDC, Hong Kong dollar stablecoins, to virtual asset spot ETFs and the Ensemble sandbox plan, every piece of legislation and every pilot is a phased result of the active exploration by Hong Kong regulators in collaboration with local financial institutions.

More importantly, Hong Kong's supervision, which has long been known for its cautiousness, will completely "shift gears and accelerate" in 2024. Whether it is the Hong Kong Regulatory Commission issuing four VASP licenses in one go in December, or the world's first ETH spot ETF, this "stable but fast" pace is enough to show that Hong Kong supervision has achieved a good balance between prudence and openness. .

If Web3 is a game, then Hong Kong in 2024 has not only formulated an upgrade route, but also compiled a "newbie guide" to welcome new players who are about to enter the game.

**2. BTC asset allocation - "Countries and companies compete to 'hoard

coins'"**

What virtual assets to invest in 2024? BTC, which has increased by 150% throughout the year, must be one of the answers. In the second half of 2024, the United States took the lead in launching a currency hoarding competition. Trump's BTC strategic reserve plan directly upgraded Bitcoin to a "national strategic material," triggering Brazil, Poland, Japan and other countries to follow suit.

The policy tone has been set, and the capital market has quickly followed suit. Throughout 2024, institutional investors purchased a total of 859,454 BTCs. Among them, MicroStrategy, a long-term BTC investor, took the lead. It increased its holdings by nearly 250,000 BTCs this year and made a huge profit of US$20 billion, firmly establishing itself as the BTC whale.

The world is ushering in a "coin hoarding wave", and corporate institutions are not far behind. Hong Kong listed company Boyaa Interactive (HK.0403) directly announced that it held 2,641 Bitcoins and 15,445 Ethereums, and quickly exchanged 14,200 ETHs for 515 BTCs. The operation was smooth and smooth; Nano Labs (Nasdaq: NA) updated It teamed up with HashKey Exchange to invest US$50 million in BTC assets. As of writing, Nano Labs already holds $5.5 million worth of BTC. The company hoards currency in one go, which can be called a textbook operation. In addition, it is understood that companies such as Guofu Innovation and Coolpad Group have also quietly followed up, blocking the Bitcoin reserve battlefield in advance.

3. Virtual asset spot ETF - "Old tool, new gameplay"

ETFs have long been commonplace in traditional financial markets, but when they are "combined" with virtual assets, they become a disruptive tool for the Web3 market in 2024. In January 2024, the United States approved the first BTC spot ETF, triggering a market frenzy. While other countries either stayed on the sidelines or began to consider it, Hong Kong responded quickly. Not only did it launch a BTC spot ETF, it also launched an ETH spot ETF first to occupy the Asian market.

Currently, there are 3 BTC spot ETFs and 3 ETH spot ETFs in the Hong Kong market, respectively launched by three top institutions: Huaxia, Harvest, and Boshi. According to Coinglass data, as of writing, the total net asset value of the Hong Kong BTC spot ETF has reached US$439 million, and the net value of the ETH spot ETF is US$63.56 million. Although there is still a gap between the scale and the United States, Hong Kong's virtual asset spot ETFs have quickly begun to occupy the market with their innovation and vitality, preparing the way for subsequent capital inflows. As a result, in July, Hong Kong welcomed Asia's first Bitcoin inverse product - CSOP Bitcoin futures daily (-1x) inverse product; in November, the Hong Kong Stock Exchange launched a virtual asset index series, including reference indices for BTC and ETH and exchange rates, bringing more financial instruments to the virtual asset market.

Virtual asset spot ETFs not only opened the door to Hong Kong’s traditional financial market, but were also the starting point for Hong Kong’s Web3 capital surge.

**4. Stablecoin - "the top leader in cross-border payments and the

'favorite' of supervision"**

Mainstream stablecoins such as USDT and USDC have long been the "top players" in the field of cross-border payments by virtue of their "hard power" anchored 1:1 with the US dollar. Whether it is crypto transactions, salary settlements, or commodity payments, stablecoins are everywhere. However, due to their “popularity” and the risk of multiple de-anchorings, they have become the focus of global supervision.

In June 2024, the EU's Stablecoin Act will take effect, instantly opening up global supervision. Hong Kong has done its part and started the year with full firepower: it released a regulatory consultation on legal currency stablecoins in February, launched a "stablecoin sandbox" plan in March, released a consultation summary in July, and directly sent the "Stablecoin Bill" to the Legislative Council in December... The KPIs are clearly arranged.

What’s even more interesting is that among the first list of sandbox players, well-known companies such as JD Coin Chain Technology, Yuancoin Innovation Technology, Standard Chartered Bank (Hong Kong), Animoca Brands, and Hong Kong Telecom (HKT) have all appeared on the list, instantly turning the stablecoin sandbox into a Became a "top club".

The current regulatory focus in Hong Kong is temporarily on the Hong Kong dollar stable currency, but this wave of operations has also stabilized the market and brought Hong Kong's digital asset rules to a higher level. As for USD stablecoins such as USDT and USDC, which are widely used around the world, will Hong Kong consider releasing them? The story is not over yet.

5. VASP license – “You must have a license to open your business”

To play in the virtual asset trading market, a VASP (Virtual Asset Service Provider) license is the “proof of entry.” In the past, there were the United States and Singapore, and later in Dubai and the European Union. It has become a mainstream trend to obtain employment with a license. As Asia's financial center, Hong Kong's VASP license is also ready.

Currently, the number of licensed platforms in Hong Kong has grown to seven, namely HashKey Exchange, OSL Exchange, HKVAX, HKbitEX, Accumulus, DFXLabs and EX.IO. These "good students" not only need to strictly comply with the compliance requirements of the Anti-Money Laundering Ordinance (AMLO), but also pass the multi-layer review of the Hong Kong Securities and Futures Commission (SFC).

Hard work always pays off, and working with a license is more favored by the market. Take HashKey Exchange, for example. In 2024, the overall platform capitalization will exceed 10 billion Hong Kong dollars, and the cumulative transaction volume will reach 580 billion Hong Kong dollars, making it one of the top 10 global centralized exchanges. Although more platforms are still awaiting review, the Hong Kong Securities and Futures Commission has laid out a clear roadmap for the licensing process. In 2025, I believe there will be more platforms licensed to enter the market.

**6. PayFi - "Is it old wine in new bottles, or is it a new payment

revolution?"**

In 2024, PayFi (payment finance) will become the new favorite in the Web3 circle. It seems that it is just moving payments to the blockchain, but in fact, PayFi Dafu has improved the efficiency of cross-border payments, instantly upgrading the traditional "slow-speed remittance" to "received in seconds".

If there is a recognized and enduring mainstream narrative in the Web3 industry, it must be the key proposition of Mass Adoption. PayFi is an important practitioner of this narrative. Broadly speaking, PayFi belongs to the RWA track, but its ambitions go far beyond that. Behind this is the power of blockchain to leverage huge amounts of real-world assets - in the payment field alone, the total size of credit card, trade finance, cross-border payment and other market segments exceeds 40 trillion US dollars, while PayFi currently only operates in The "long tail market" of traditional finance is unfolding and has huge potential.

The core value of PayFi lies in connecting the blockchain capital pool with off-chain financial needs. This connection is not easy and requires the integration of multiple forces: first, it must operate in a relatively relaxed regulatory environment and a crypto-friendly city; second, it must have financial strength and be able to provide everything from infrastructure to KYC, deposits and withdrawals, liquidity management, etc. There are not many institutions that support full-chain compliance, and only a few regulatory licensed institutions have this capability, such as HashKey Exchange, the largest licensed virtual asset exchange in Hong Kong.

Hong Kong may become PayFi’s “financial hot spot”. As one of the global financial centers, Hong Kong has huge cross-border capital needs, mature financial infrastructure, and policy support such as the "Ensemble" plan and stable currency supervision. The red carpet for the industry’s launch in Hong Kong continues to be laid .

**7. Traditional institutions are entering the market - "Old money

becomes new money"**

Although virtual asset spot ETFs have found a way for traditional capital to enter the market with Web3, how can indirect investment be as "spicy" as making money directly? Looking at the crypto bull market at the beginning of the year, the traditional financial giants in the United States have made a lot of money by issuing BTC spot ETFs . On the other hand, Hong Kong brokerages obviously have tens of millions of users, but they are still guarding the stock market that is like a cold winter - the daily trading volume of more than 10,00 Hong Kong stocks is less than HK$10,000 .

To open up your mind, it is better to take users to participate in Web3. As a result, Hong Kong's traditional securities firms finally "ran into the market." Traditional securities companies such as Victory Securities and Adelaide Securities, Internet securities companies such as Futu, Tiger, and even foreign giant Interactive Brokers have all obtained the No. 1 license upgrade from the Hong Kong Securities Regulatory Commission and quickly deployed virtual asset businesses. In order to "avoid detours", they chose to join forces with the local licensed exchange HashKey Exchange, integrate HashKey Pro, an institutional-level comprehensive service, and quickly open the deposit, withdrawal and trading functions of virtual assets such as BTC and ETH. In just a few months, it has driven a transaction volume of HK$5 billion .

The participation of brokers not only brought traffic, but also brought their professional advantages to Web3 - such as risk control, compliance, and old customer relationships, drawing traditional investors into the world of virtual assets in minutes. What is most worth looking forward to is that if the Web3 market breaks through further in 2025, Hong Kong's securities firms will even bring the world's "old money" into the market with their inherent advantages, fully linking the traditional finance and virtual asset markets.

**8. OTC supervision - the tens of billions of dollars market may be put

on a "tightening curse"**

"To deposit and withdraw funds, go to Hong Kong", there are hundreds of offline conversion stores at every turn, attracting more and more people. Especially for those institutions and high-net-worth users with millions of transactions, OTC transactions are not only flexible, but also provide higher privacy and liquidity. For this reason, Hong Kong’s OTC market has always been vibrant. According to statistics, there are about 200 offline OTC trading stores and 250 online active service providers in Hong Kong, with an annual transaction volume of nearly 10 billion US dollars .

There is an undercurrent behind the prosperity. In recent years, multiple OTC robbery incidents and the false propaganda of OTC promoters in the JPEX incident have made people see clearly the compliance shortcomings and potential money laundering risks in the OTC market. In response to this, the Hong Kong government quickly "made up for the mistakes" and issued the "Recommendations on the Regulation of Over-the-Counter Trading of Virtual Assets" in February, planning to put a "tightening curse" on the OTC market. According to the latest news, the supervision plan is for consultation and legislation in 2025/2026, and the customs and the China Securities Regulatory Commission are working closely on the project.

Opinions in the industry are polarized - some are worried that short-term regulation will cool down the market, while others are optimistic about the long-term trust dividends brought by regulation. After all, without a "license", the market is just "free range"; with supervision, Hong Kong's OTC market can grow from a "wild kingdom" to a compliance center trusted by global capital, welcoming greater growth.

9. Running meeting - "National Fitness Project"

Running has always been a "national sport" of Web3, and Hong Kong is this year's sports base. Taking a closer look at 2024, there will be no fewer than 50 medium and large-scale events in Hong Kong. From discussions on virtual asset supervision to the implementation of blockchain technology, from code surfing by technology geeks to strategic dialogues by business leaders, Web3 topics are all-encompassing.

Large summits such as WOW Summit , FORESIGHT 2024 , Hong Kong Web3 Carnival , Fintech Week , technology forums such as Solana Hacker House HK and HashKey Hackerhouse Taichu , not to mention countless small salons and cocktail parties... The most typical one is the Hong Kong Web3 Carnival. The event space is nearly 9,000 square meters, and the event lasts four days. In addition to the main venue, nearly 200 peripheral activities were held near the event. According to vague estimates, the cumulative number of offline participants exceeds 50,000, attracting more than 300 world-renowned speakers and more than 100 popular projects. There will also be Consensus held in Hong Kong for the first time in February next year, and the Web3 Carnival at the end of April.

The industry will continue to run and run, and it will continue to be hot in 2025.

**10. Shop in front and factory in back - "Shenzhen-Hong Kong combined

boxing, a new situation in Web3"**

On the stage of 2024, the Chinese Web3 center has moved from Shanghai, Hangzhou and other places to Hong Kong. The "front store and back factory" model is a unique skill developed by Hong Kong and Shenzhen. This combination of punches not only provides industry advantages, but also creates a unique style of play unique to the Greater Bay Area.

"Front shops" are Hong Kong's strength. As one of the world's leading international financial centers, Hong Kong has an efficient capital market, an open business environment and continuously improving virtual asset regulatory policies. From far-reaching and continuous international industry activities, to localized and clear policy guidance, to strong policy support such as the HK$10 billion Innovation and Technology Guidance Fund , the special visa program , and a high-quality financing environment. For Web3 companies, landing in Hong Kong means standing in the C position of the global market.

The trump card of "back-end factory" Shenzhen is its strong R&D capabilities, complete industrial chain, and ultimate cost control, which provides an ideal environment for the incubation of Web3 projects. Therefore, many Hong Kong Web3 companies prefer to deploy their technical teams in Shenzhen for the development of underlying blockchain technology, hardware equipment production and some operational links, allowing for rapid trial and error and rapid implementation. In 2024, Hong Kong Cyberport will also strengthen cooperation with multiple technology parks in Shenzhen to make the flow of resources between Shenzhen and Hong Kong smoother.

This "front store and back factory" model forms a closed loop of "brand + technology", which is helping Web3 companies unleash their huge potential and enter the global market. In 2025, Hong Kong is worth looking forward to.