Podcast Notes | Interview with Scroll Co-Founder: Exploring Hong Kong's Cryptocurrency Path
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Podcast Notes | Interview with Scroll Co-Founder: Exploring Hong Kong's Cryptocurrency Path
Hong Kong's appeal to cryptocurrency enthusiasts lies in its internationalization, economic freedom, and diverse community, making it an exciting and secure environment for crypto culture.
Navigating Web3 tides with focused insightsCompilation & Translation: TechFlow
In this episode of the podcast, Bankless invites Sandy Peng, co-founder of Scroll, to discuss Hong Kong's stance on cryptocurrency, whether Hong Kong is becoming more crypto-friendly, and what this might mean for China, Asia, and the world.
Hosts: David & Ryan, Bankless
Guest: Sandy Peng, Co-founder of Scroll
Program: Bankless Podcast
Original Title: "The Surprising Truth About Crypto in Hong Kong"
Episode Link: Link
Air Date: October 18, 2023
Hong Kong’s Geopolitical Advantages
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Sandy believes that as an international financial center, Hong Kong must maintain its leadership in financial innovation and technological development. With a population of around 8 million—comparable to New York City—it is considered a key hub for economic and trade activities in its region.
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Hong Kong boasts abundant financial and technical talent. Its deep understanding of financial systems has fostered the rise of first-generation crypto trading markets, entrepreneurs, and centralized exchanges. Clear regulatory frameworks encourage entrepreneurs to enter the space. Moreover, Hong Kong’s financial ecosystem and society exhibit high technological adaptability, enabling rapid responses to new technologies and financial products.
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Sandy notes that Hong Kong and Singapore share a healthy competitive relationship. Both cities are Asian financial hubs attracting significant international financial and technical talent. Singapore demonstrated early friendliness toward cryptocurrency, and its open, proactive legislation has pressured Hong Kong to accelerate the formulation and implementation of crypto-supportive policies and regulations.
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Hong Kong’s geographical proximity to mainland China, along with close cultural and economic ties, allows it to attract Chinese capital and talent, while also being highly susceptible to shifts in Chinese policy and economic developments—unlike Singapore, which requires a four- to five-hour flight.
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In 2022, the Hong Kong government announced its ambition to become a global Web3 hub. Government agencies have worked collaboratively to support crypto businesses in Hong Kong, actively participating in public consultations and swiftly adapting to global financial innovations and technological trends by enacting business- and innovation-friendly regulations.
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Hong Kong’s appeal to crypto enthusiasts lies in its international character, economic freedom, and diverse community, making it an exciting and secure environment for crypto culture.
Hong Kong’s Crypto Regulation and Government Support
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Sandy believes that Hong Kong’s crypto regulatory environment and government support have followed a unique path of evolution. Initially, Hong Kong’s crypto community consisted of a small but active and passionate group of miners, investors, tech enthusiasts, and startup founders.
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Sandy points out that despite Hong Kong’s wealth of financial talent and international community, there was previously a lack of clear regulations and regulatory frameworks in the crypto and blockchain space. The community faced various challenges, including legal uncertainty, investor protection issues, and market trust deficits.
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Sandy, together with other industry experts, explored ways to design and implement a regulatory framework that balances market innovation with consumer protection. This effort culminated in the successful establishment of the VASP licensing regime, providing clear rules and guidelines for crypto exchanges, investors, and other stakeholders, enabling them to operate within a safer, more credible, and regulated environment.
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Sandy views this shift as a significant milestone in the maturation of Hong Kong’s crypto community. It not only enhanced market trust and credibility but also attracted more investors and enterprises, further driving the development and innovation of crypto and blockchain technology in Hong Kong.
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Hong Kong has successfully balanced the needs of regulation and innovation—protecting consumers and market safety while advancing technological and financial innovation. Its regulatory model, praised for transparency, flexibility, and innovation, has drawn attention from other countries.
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Leveraging its status as an international financial center, Hong Kong maintains an open and supportive attitude toward financial innovation and technological advancement. Its favorable regulatory environment and strong government backing have catalyzed the emergence of the crypto industry, attracting numerous entrepreneurs and investors and generating substantial wealth.
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Stablecoin Legislation: Sandy mentions that the Hong Kong Monetary Authority (HKMA) has proposed a stablecoin licensing regime, which will be codified into law. In the future, a number of stablecoin projects and issuers are expected to emerge in Hong Kong—an exciting development.
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Sandy believes this stablecoin licensing regime represents another important response by Hong Kong to the development of crypto and blockchain technology. The Hong Kong government and regulators have consistently maintained an open and supportive stance toward financial innovation and technological progress. A clear and transparent regulatory environment, combined with proactive government support, provides favorable conditions for the growth of the crypto industry.
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Digital Asset or STO Regime: Sandy adds that Hong Kong’s upcoming stablecoin regime may involve regulations governing stablecoin issuance and management, complemented by the anticipated stablecoin framework and potential future digital asset or STO regime, all aimed at ensuring market transparency, security, and integrity.
TechFlow Note: STO (Security Token Offering) is a new form of capital raising that allows companies to raise funds by issuing blockchain-based security tokens.
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VAS Licensing Regime: Sandy notes that Hong Kong’s VAS licensing regime is an initiative driven by the Securities and Futures Commission (SFC), allowing virtual asset exchanges to trade a range of digital assets, including Bitcoin and Ethereum. This regime has already been implemented in Hong Kong, marking the region’s formal recognition of cryptocurrency.
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