It will focus on Web3 innovation.

Financial Secretary Paul Chan has announced updates to the city’s virtual asset policy, emphasising its commitment to Web3 and innovation.

Blockchain’s potential to improve transaction efficiency, reduce costs, and increase transparency is becoming more evident, with increased institutional adoption, Chan said during his speech at the Hong Kong Web3 Festival on 7 April.

“Today, we are witnessing a marked increase in the institutional adoption of Web3, with traditional banks, asset managers and brokers increasingly integrating digital assets into their offerings,” he said.

Chan highlighted the bullish trend in cryptocurrencies driven by wider global adoption and pointed out that blockchain’s benefits extend beyond finance, with applications in regenerative finance (ReFi) and tokenized carbon credits.

He also noted the growing convergence of Web3 and AI. “. In finance, decentralised AI algorithms enhance credit assessments, audit smart contracts with greater precision, and deliver hyper-personalised investment strategies.”

Hong Kong’s regulatory approach is aimed at supporting innovation while ensuring market integrity. “We were among the first in the world to have established clear licensing frameworks for virtual asset trading platforms, or VATPs,” Chan said. The Securities & Futures Commission has issued 10 VATP licenses, and Hong Kong now leads the Asia Pacific region with the largest virtual asset ETF market.

Chan also confirmed that stablecoin legislation is near completion, with the Hong Kong Monetary Authority (HKMA) working on a licensing regime for stablecoins. “My colleagues at the Financial Services & the Treasury Bureau and the Hong Kong Monetary Authority (HKMA) are working hard to get the relevant licensing regime to go live within this year.”

Chan announced that Hong Kong will release a second policy statement on virtual assets later this year, focusing on how Web3 can accelerate traditional financial services. “Later this year, we will unveil a second policy statement on the development of virtual assets.”

He also cited the importance of a “technology-neutral” regulatory approach, stressing that markets should decide which innovations prevail. “It would only be counterproductive if jurisdictions or regulatory authorities favour particular types of cryptocurrencies, or rule out technologies or applications at the outset.”

Chan called for responsible development of Web3 and AI technologies. “Here in Hong Kong, we advocate for suitable guardrails – frameworks that protect investors, consumers and users while encouraging innovation activities.”

“We are here to collaborate with innovators and entrepreneurs from around the world, pushing the boundaries of what is possible, and leveraging the transformative power of Web3 for the greater good,” he concluded.

Sources: Hong Kong Business