Hong Kong Observations: Why is it almost impossible for Hong Kong to become a global crypto center?

Written by: ThePrimediaDAO Founder Jerry

After the bustling noise, it is necessary for us to pause and reflect calmly. Our ability to seize the policy opportunities in Hong Kong hinges on "Hong Kong's ability to grasp the situation of the crypto market," to establish Hong Kong's position as a global crypto center.

However, we judge that it is "almost impossible" for Hong Kong to become a global crypto center.

This is not an effort to "blacken" Hong Kong in the field of crypto economy; we also hope that Hong Kong can seize this historical opportunity to establish itself as a global crypto center, which is why we did not make a "impossible" judgment.

The glimmer of possibility lies in the narrative of "why we judge that Hong Kong is unlikely to become a global crypto center."

In the context of the recent turmoil caused by Americans, Hong Kong will become the main narrative of this bull market. This is a common perception across the entire crypto market and serves as the fundamental driving force behind the surge in Hong Kong.

However, this is not a good phenomenon and could lead to a bad outcome—if Hong Kong's virtual asset policy gathers the scattered old crypto players to continue speculating on coins, even if it is beneficial for this bull market, it will create a gap between the central government's expectations for Hong Kong.

Therefore, the Hong Kong government must be aware of this, which is why the Web3 policies led by the government largely lean towards traditional technology and traditional finance; just look at the members of the Hong Kong government's Web3 association to understand this.

Clearly, this is a negative phenomenon for the native Web3 industry—Hong Kong's benefits do not rely on either side. Thus, Web3 builders gather in Hong Kong, Web3 events are in full swing, and resources, capital, and talent are converging and being allocated to Hong Kong, largely driven by market forces. But this is evidently insufficient to forge Hong Kong into a global crypto center.

As we describe the situation, we base our observations on Hong Kong's virtual asset policy, Web3 policy, public statements from key department heads representing the government, and the industry reactions they provoke. We are disappointed to find that Hong Kong has not integrated the role of "financial center" into the narrative of Web3/crypto economy.

All of this forms the basis for our judgment that "Hong Kong is unlikely to become a global crypto center." The key to breaking this dilemma lies in how to leverage the capital allocation role of finance—more specifically, "how to transform the capital from crypto speculation into funding that supports the development of the Web3 application market."

In the traditional economic world, the main narrative of finance is not a zero-sum game of speculation but rather a hub for effective capital allocation. For example, over the past two to three decades, the role of financial capital allocation has shaped the leading position of the commercial technology industry, exemplified by New York/Wall Street. Therefore, compared to the financial empowerment of technology in the U.S., Hong Kong's financial center does not have an advantage in the previous round of financial capital allocation and the evolution of the commercial technology industry. Take Alibaba as an example; Hong Kong stocks were once the first choice, and Jack Ma turned to the U.S. stock market only after being rejected by Hong Kong.

This is not an easy task. In the current crypto economic world, DeFi has not played the role of capital allocation either.

But this seems to be the only glimmer of hope for "Hong Kong to become a global crypto center"—Hong Kong must resolve the contradiction and unity between "financial speculation and capital allocation" in the crypto economy.

Regarding the contradiction and unity of "financial speculation and capital allocation," ThePrimediaDAO has previously selected DeFi samples for collaborative research and analysis articles.

Simply discussing the topic of "financial speculation and capital allocation" feels somewhat abrupt in the narrative of Hong Kong's Web3. We can further extend the discussion on how Hong Kong can resolve the contradiction and unity between "financial speculation and capital allocation" in the crypto economy, based on the current expectations of central policy attitudes and the global crypto economic landscape—by leveraging DeFi and the capital of the crypto circle to empower the Web3 industry, achieve the development of the native Web3 technology application market, and promote the integration of crypto economic virtual assets with the real-world financial system.

However, the current noise is far from this. As mentioned at the beginning, it is time to think calmly; otherwise, the aftermath of this noise will leave chaos, and the overall decline of the Chinese Web3 and Hong Kong's crypto center will endanger each of us practitioners.

This article serves as a starting point, hoping that some forces and insightful industry professionals will, while developing their own careers, promote the narrative of Hong Kong's crypto center in a positive direction.

Thanks to the friends from the Hong Kong Web3 Carnival for their shares, and to those who held differing opinions for the discussions that played a necessary role in the process of clarifying this article's theme.

We have selected a few "insights from the Hong Kong Web3 journey" and also extracted some interesting exchanges from the discussions:

DIDhub.com Angel Investor Xiao Ba

From a macro perspective, the situation for Hong Kong Web3 is very promising, whether from the policy level, capital level, media level, or project level, it has attracted participation and attention from global Chinese individuals. The main theme is positive, open, and international. However, from various signs, we feel that the entire industry is still in a bear market state, with very few institutions truly willing to support project development; most are still observing, and for project parties, survival must remain the top priority. If there is an opportunity, consider settling in Hong Kong Science Park or Cyberport for some basic support, but once settled, there is a possibility of being constrained by policies in the future, which is something project parties should think deeply about, as there is no such thing as a free lunch.

The quality of Web3 projects exhibited this year has generally improved, with many industry OGs personally starting projects. This type of project is relatively more worthy of attention from Web3 investors. I have seen many entrepreneurial teams from prestigious universities like Tsinghua and Peking University, and major companies like Tencent and Alibaba, who hold massive funds but still go bankrupt. They lack neither technology nor talent, nor endorsements; so why do they fail? Because they lack a deep understanding of the Web3 industry, lack insights into the Web3 market, and even more so, lack a Crypto Native mindset. In the Web3 field, apart from those projects backed by large institutions that succeed from the top down, the breakthroughs of other smaller projects are almost all bottom-up and involve co-building and co-winning with the community. Web3 has never needed aloof entrepreneurs but rather grounded ones. For Web3 entrepreneurs looking to develop in Hong Kong, competition will be exceptionally fierce this year. Why do I say this? Because in this small place, almost all Web3 practitioners from the East will be drawn in; just walking through a venue, you might encounter your competitors. Of course, this also has its benefits; if we can actively embrace competition and integrate various Web3 ecosystem resources, we may be able to grow the entire industry together with our competitors, benefiting everyone in the process.

Foresight News Researcher Peng SUN

++Looking left and right, accelerating around the bend: The speed and passion of Hong Kong Web3++

After staying in Hong Kong for a week, I took a taxi…