Hong Kong Observations: When Bull Market Expectations Meet Government's Strategic Ambitions
The "Guidelines for Operators of Virtual Asset Trading Platforms" officially came into effect today.Author: Jerry, ThePrimediaDAO
On June 1, 2023, Hong Kong, the new policy "Guidelines for Virtual Asset Trading Platform Operators" came into effect. This is destined to become a historic moment in the annals of cryptocurrency.
Preparations for virtual asset trading in Hong Kong have long been in place, and the government's efforts will drive the on-chain integration of off-chain assets worth trillions into the crypto economic system. Currently, the foundational implementation of Web3 is continuously advancing, AI computing power is iterating rapidly, and the construction of the metaverse is steadily progressing. The leap towards a digital society is unfolding here, and the next ten to twenty years will be a phase of symbiosis between the physical and digital worlds. In this context, Hong Kong's virtual asset layout holds great potential and will become an opportunity for this round of market transitions.
In market expectations, there are many factors influencing bull and bear markets, including U.S. stock and bond policies, Federal Reserve interest rate hike news, geopolitical situations among major powers, as well as the cyclical nature of Bitcoin itself and the development of Web3 infrastructure and applications.
In the phase where the determinants of bull and bear markets are influenced by Bitcoin cycles and Web3 fundamentals, we believe that this round of market transition has already bottomed out in 2022. We discussed this in our year-end article "The Value Logic of 'Civilization Stops' and 'Bear Market Bottoming'." We will not analyze the external information one by one here.
In fact, since the beginning of 2023, we have entered a new bull market, but the market is still under the inertia of a bearish atmosphere. This requires an opportunity— we believe that since the Hong Kong SAR government officially released the "Policy Declaration on the Development of Virtual Assets in Hong Kong" in October last year, coupled with the wave of excitement in April this year, the market's expectations and cautious attitudes towards Hong Kong will become a key factor for a bull market.
Combining this with the "Beijing Internet 3.0 Innovation Development White Paper (2023)" released on the 27th, we can better understand the significance of Hong Kong's virtual asset layout. If we understand it within the context of Hong Kong's role in China's digital advancement strategy, there are two major positive angles— the delayed implementation of the new policy reflects Hong Kong's cautious and steady attitude, and the regulatory deployment primarily ensures investor interests, opening up new opportunities for the heavily regulated ICO and NFT (PFP) speculative markets since 2017; China's embrace of the crypto world has already transitioned from policy documents by relevant domestic ministries to practical applications in the special administrative region.
Without the layout of the crypto economy, whether it is Internet 3.0, blockchain, or the metaverse, the deployment and development will lose the core essence that reconstructs the economic relationships and social order of the digital society. We have already discussed related content in the inaugural issue of the industry blockchain media project DcMedia, titled "How We Identify the Quality of Metaverse Stocks."
Hong Kong is ambitiously laying out its position to become a global crypto economic center, coinciding with the backdrop of the U.S. market being marred by a series of frustrating events and disappointing regulations from the U.S. government, which presents a new opportunity for the Chinese crypto community and the entire crypto world.
However, there is still much to be done for Hong Kong to become a global crypto economic center. In April, we analyzed in the "Hong Kong Insights" series— if Hong Kong's virtual asset policy conditions gather scattered old coin players to continue speculating, even if it benefits this round of the bull market, it would create a gap in the central government's expectations for Hong Kong; thus, the Hong Kong government is likely aware of this, which is why the Web3 policies led by the government largely lean towards traditional technology and finance, as can be seen from the members of the government's Web3 association.
In addition to avoiding disruption from opportunistic harvesters, it is essential to transition off-chain assets to on-chain, directly facing the native market of the crypto economy— focusing on "financial speculation and capital allocation" to leverage DeFi and crypto capital to empower the Web3 industry, achieve the development of native Web3 technology application markets, and promote the integration of crypto economic virtual assets with the real-world financial system.
Of course, on the road to becoming a global crypto economic center, the market size of off-chain assets worth trillions is sufficient to bring tremendous vitality to the crypto economic market. Especially as NFTs, having crossed the speculative phase of PFPs, provide conditions for off-chain assets to go on-chain with their scalability and interoperability. In the previous bull market, mechanisms like liquidity mining and vampire attacks in DeFi also laid the foundation for off-chain assets to go on-chain and thus practice "financial speculation and capital allocation."
