Will Hong Kong become the global hub for Web3?
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Will Hong Kong become the global hub for Web3?
A brief discussion on the current state of Hong Kong's Web3 ecosystem and its potential future directions.
Navigating Web3 tides with focused insightsBy Liu Honglin
Recently, Wu Talk Blockchain conducted an in-depth interview with Mr. Leung Han-ching from the Hong Kong Investment Promotion Agency (IPA) ("Wu Talk Dialogues with Hong Kong IPA: Hong Kong's Natural Advantages in Developing Web3 and Cryptocurrency"), discussing Hong Kong’s strategic direction in the fields of Web3 and digital assets. From policy support and market feedback to capital flows and early experiments in real-world asset (RWA) tokenization, the conversation systematically outlines Hong Kong’s positioning in this emerging sector.
As a lawyer who has long followed the Web3 industry, I am frequently asked: "Can Hong Kong truly become a global hub for Web3?" This question does not have a simple answer, as it involves not only the policy environment and market appeal but also capital mobility, regulatory frameworks, talent availability, and how Hong Kong interacts with global financial markets. Mr. Leung’s insights offer valuable perspectives, and drawing on my professional experience, I would like to analyze the key points raised in the interview and discuss the current state and future trajectory of Hong Kong’s Web3 ecosystem.
How Is Hong Kong Supporting the Web3 Industry?
In the interview, Mr. Leung outlined the IPA’s core work in the Web3 space. He emphasized that Hong Kong has long been known for its free-market economy and international branding. The city’s high capital liquidity, mature regulatory framework, and strong integration with global markets give it natural advantages in developing Web3 and cryptocurrency industries. From the government’s perspective, the IPA’s primary role is to attract international businesses to establish operations in Hong Kong and help them access local resources more efficiently. Whether companies originate from mainland China, the United States, the UK, or are founded by ethnic Chinese entrepreneurs, the IPA facilitates connections with local banks, investment institutions, and government departments to accelerate their market entry.
The IPA also plays a significant role in industry promotion. For instance, it actively participates in and supports major events such as Consensus and Hong Kong FinTech Week, aiming to create platforms for blockchain, virtual assets, fintech, and Web3 enterprises to connect and exchange ideas—thereby attracting greater attention to Hong Kong’s market potential. Another critical function is policy feedback. Given its close daily interactions with businesses, the IPA can quickly identify industry trends and pain points and relay these insights to regulators, ensuring policies remain aligned with real-world developments.
Beyond facilitation, the IPA helps drive large-scale industry integration. Take Project Ensemble launched by the Hong Kong Monetary Authority (HKMA), which aims to advance RWA (real-world asset) tokenization and has drawn participation from numerous banks and tech firms. However, many international companies—even if aware of such initiatives—struggle to directly engage with regulators or investors. Here, the IPA serves as a vital bridge, leveraging its network to connect enterprises with the right stakeholders, enabling smoother integration into Hong Kong’s Web3 development landscape.
Mr. Leung noted that Hong Kong has consistently supported the Web3 industry without undergoing dramatic policy shifts. From a governmental standpoint, Hong Kong operates as a free market with unrestricted capital flow, giving it inherent strengths in fostering borderless, global industries. The core characteristics of Web3—globalization and decentralization—align closely with Hong Kong’s financial ecosystem. As such, the IPA began focusing on this sector early and has maintained continuous support.
That said, while Hong Kong broadly supports Web3, specific policies remain cautious. In the area of ICOs (initial coin offerings), for example, Hong Kong has not adopted a fully liberalized approach. Instead, it enforces relatively strict准入 thresholds. Currently, licensed exchanges in Hong Kong must conduct rigorous due diligence (DD) before listing new tokens, ensuring projects meet legal and operational compliance standards. Only those satisfying regulatory requirements may operate within the Hong Kong market. This model reflects the government’s effort to balance market openness with investor protection.
Three Core Directions of Hong Kong’s Web3 Strategy
Mr. Leung highlighted several key focus areas in Hong Kong’s Web3 development, reflecting both policy priorities and the city’s strategic positioning in the global crypto landscape.
Currently, Hong Kong’s Web3 growth centers on three main pillars: stablecoins and cross-border payments, real-world asset (RWA) tokenization, and digital culture alongside Crypto Native industries. These domains align well with Hong Kong’s traditional financial strengths while also tracking global trends in digital assets.
Stablecoins and Cross-Border Payments: A Key Bridge from Traditional Finance to Web3
As mentioned by Mr. Leung, the largest use case for stablecoins lies in cross-border payments, particularly in B2B trade.
Existing international payment systems often suffer from slow processing times and high costs—especially in developing countries and emerging markets. For some international trading firms, fund settlements can take days or even a week, with transaction fees reaching up to 10% in certain regions. In contrast, stablecoin transactions offer low cost, high efficiency, and 24/7 availability. By using stablecoins, transaction times can be drastically reduced, working capital turnover improved, and foreign exchange costs lowered. Leveraging its status as a global financial center, Hong Kong aims to promote compliant stablecoin development so they can serve as key payment tools in global trade and finance.
Two dominant stablecoins in the market—USDT (Tether) and USDC (Circle)—are already widely used in cross-border payments, though their regulatory compliance remains a concern for governments worldwide. Hong Kong seeks to introduce regulated stablecoins that meet compliance standards while fulfilling market demand.
The HKMA released a stablecoin regulatory framework in 2023 and is encouraging the establishment of licensed stablecoin issuers in Hong Kong. The government is advancing pilot programs for regulated stablecoins, aiming to leverage blockchain technology to enhance settlement efficiency in financial transactions.
This strategy responds to two major market dynamics: first, the rapidly growing demand among global foreign trade companies—particularly Chinese cross-border e-commerce and export firms—for faster, lower-cost international settlement tools; second, Hong Kong’s position as Asia’s leading financial hub. Gaining an edge in stablecoin clearing and settlement could significantly boost its influence in the global crypto-financial system.
Looking ahead, stablecoins’ role extends far beyond exchange liquidity. They are increasingly becoming foundational infrastructure for international trade payments, supply chain finance, and even central bank digital currency (CBDC) experimentation. Hong Kong’s stablecoin pilot projects are likely to attract more firms to set up issuance and settlement operations locally, reinforcing its centrality in the Web3 financial ecosystem.
Real-World Asset (RWA) Tokenization: Bridging Traditional Finance and Web3
RWA (Real-World Assets) tokenization is one of the most important Web3 trends in global finance today, and Hong Kong’s positioning in this field is especially strategic. RWA tokenization refers to converting traditional financial assets—such as bonds, equities, real estate, and funds—into digital tokens on blockchains, enabling them to be traded on decentralized networks and enhancing liquidity.
Mr. Leung pointed out that Hong Kong already has concrete examples in RWA tokenization. In 2023, the Hong Kong government issued the world’s first tokenized green bond, followed by a second pilot round in 2024. These moves demonstrate Hong Kong’s innovation in global green finance and signal its intent to improve transparency and liquidity in capital markets through blockchain technology.
The potential market size for RWA tokenization is enormous. According to a white paper jointly published by Boston Consulting Group (BCG), Invesco, and AxoneChain, the global tokenized fund market could reach $610 billion. Several financial hubs—including Switzerland, parts of the UAE, and certain U.S. states—are already advancing RWA initiatives, and Hong Kong aims to secure a leading position in this race.
Hong Kong enjoys several competitive advantages in RWA development: First, it is a major node in global capital markets with a deep pool of institutional investors. Second, its financial regulation is well-developed, offering robust legal and compliance support. Third, Hong Kong’s banking and securities infrastructure is already highly digitized, providing practical technological foundations for RWA implementation.
The successful deployment of RWA tokenization will unlock new investment opportunities in Hong Kong’s capital markets. Traditional real estate funds, infrastructure investment vehicles, and private equity funds could all benefit from increased liquidity and broader market access via blockchain-based tokenization. Moreover, tokenized securities enable much faster trading than traditional markets, enhancing Hong Kong’s overall competitiveness. Going forward, as the government continues refining relevant regulations, RWA tokenization is poised to become a cornerstone of Hong Kong’s Web3 advantage.
Digital Culture and Crypto Native Industries: Unique Commercial Opportunities for Web3 in Hong Kong
Beyond stablecoins and RWA tokenization, Hong Kong holds unique strengths in digital culture and native crypto (Crypto Native) industries. As Mr. Leung noted, Hong Kong is not just a global financial center—it is also the world’s second-largest art auction market after New York, having surpassed London in 2020. This positions Hong Kong as fertile ground for NFTs (non-fungible tokens) and digital art markets.
After the NFT boom of 2021 gave way to a more rational market, Hong Kong’s digital culture sector continues to evolve. Many high-net-worth individuals and younger generations show strong interest in digital artworks, and Hong Kong’s international environment makes it an ideal venue for NFT trading and development. International auction houses like Sotheby’s and Christie’s have already begun offering NFT art auctions, creating new commercial avenues for Hong Kong’s digital cultural industry.
Beyond NFTs, Hong Kong has emerged as a gathering point for Chinese-speaking Crypto Native entrepreneurs, especially in consumer-facing (C-end) applications such as crypto social platforms, Web3 gaming, and on-chain content ecosystems. While Western Web3 firms tend to focus on infrastructure, Chinese entrepreneurs bring extensive experience from the Web2 era in e-commerce, social networking, and content platforms. With favorable policies, abundant capital, and seamless access to overseas markets, many Chinese Web3 founders choose Hong Kong as their international headquarters to explore new C-end application opportunities.
The commercial potential of digital culture and Crypto Native industries in Hong Kong goes well beyond NFT trading. Major brands are beginning to launch metaverse-related initiatives in Hong Kong, including branded virtual spaces and digital fashion. Furthermore, Hong Kong’s influence in international film and entertainment opens vast possibilities for applying Web3 technologies in movies, music, and gaming.
In the future, Hong Kong may advance further experiments in NFT and digital asset regulation to attract global digital artists, game developers, and content creators. If Hong Kong can establish clear regulatory guidelines for the Web3 cultural industry and provide diverse monetization channels for creators, it could emerge as a leading global hub for Web3-driven culture and creativity.
Mankun Lawyer’s Summary
From a global competitive perspective, Hong Kong’s Web3 development model differs from other financial centers such as Singapore, Dubai, and Switzerland. Singapore focuses more on nurturing early-stage Web3 startups, Dubai attracts global capital through relaxed regulation, whereas Hong Kong’s strategy emphasizes deeply integrating Web3 into its traditional financial system and driving industrial upgrades through compliance.
Hong Kong’s stablecoin initiative prioritizes meeting cross-border payment needs rather than merely expanding crypto trading. Its RWA tokenization efforts respond to the transformation of global capital markets by leveraging blockchain to enhance asset liquidity. In digital culture, Hong Kong aims to capitalize on its leadership in the international art market to explore new business models around NFTs and the metaverse.
Hong Kong’s “natural advantages” in Web3 are real—but success is not guaranteed. It will require consistent policy execution, sustained market development, and continuous improvement in global competitiveness. At its core, Hong Kong remains an international financial center, with Web3 serving as a crucial component of financial innovation. Finding the right balance between regulation, market demand, and compliance frameworks will determine whether Hong Kong can truly become a global Web3 nexus.
From a legal standpoint, while Hong Kong’s Web3 landscape offers immense opportunities, compliance remains the most critical foundation. For industry participants, understanding regulatory logic and strategically designing business models will be essential to thriving in the Hong Kong market. For Web3 companies looking to enter Hong Kong, now is the most crucial window: the policy environment is becoming clearer, and market opportunities are gradually unfolding. Still, businesses must carefully plan their compliance strategies—particularly regarding capital flows, regulatory licenses, and operational models—to ensure full alignment with Hong Kong’s financial rules.
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