Author: Colin Wu

This article is an exclusive interview with Hong Kong Legislative Council member Kenneth Lau, who elaborates on his understanding and promotion logic of the Web3 and cryptocurrency industry, and reflects on his journey from tech venture capital to supporting blockchain development. He emphasizes the importance of blockchain technology and explains the evolution of Hong Kong from a "tolerant experiment" to formulating clear regulatory policies. He believes that a robust regulatory strategy helps enhance market confidence and avoids short-term speculation that could harm Hong Kong's financial brand. At the same time, Kenneth Lau discusses Hong Kong's comparative advantages with regions like Singapore and Japan, suggesting that Hong Kong should focus on the international market and build a center for financial product innovation. He points out that stablecoins, compliant exchanges, and on-chain financial infrastructure are key to Hong Kong's next stage of development, and emphasizes that Hong Kong should maintain an open international positioning, leveraging its complementary relationship with the mainland rather than competing. Finally, he stresses that Hong Kong's push for Web3 is not driven by short-term economic considerations, but rather aims to support the sustainable development of the industry from an institutional foundation.

Reflecting on the Journey from Venture Capital to Legislation and the First Encounter with Cryptocurrency

Colin: Today we have invited Hong Kong Legislative Council member Kenneth Lau, one of the most supportive members of Web3 in Hong Kong, who has expressed many relevant views. Recently, there has been a significant increase in overall support for Web3 in Hong Kong, as well as a vibrant public opinion atmosphere. We have some questions for Kenneth Lau to discuss the current situation in Hong Kong and how it should develop in the future.

First, could you introduce yourself and when you first encountered cryptocurrency? When did you buy Bitcoin for the first time?

Kenneth Lau: I am a member of the seventh Legislative Council of Hong Kong, representing the technology and innovation sector. Before entering the Legislative Council, I was involved in tech venture capital. For the past twenty years, I have been engaged in investment through my family business and the fund I later established. In 2021, I began participating in the Legislative Council as a member.

If I recall my first encounter with cryptocurrency, it was around 2014 or 2015. At that time, we were often traveling to the U.S. for our fund, which was one of the early countries exploring this field. Blockchain technology was just emerging, and Ethereum and Bitcoin were beginning to gain attention. Around 2015 or 2016, there was also a period of ICO frenzy, with many different token projects being launched in the U.S.

However, since we were running a relatively traditional tech fund, despite our venture capital background, we were still quite conservative and did not participate much in these token projects.

Personally, I might have tried simple buying and selling of Bitcoin during that phase, mainly to experience the operational process. I can't say I was deeply involved in the crypto space; I was more in an observational and attentive state, watching how this field gradually developed.

Conservative Attitude Towards Cryptocurrency and Focus on Technology

Colin: Over the years, when you first encountered or began observing cryptocurrency and blockchain, what were your thoughts or reflections? Did you have a positive attitude from the beginning, or did you feel that the industry was chaotic and had some issues?

Kenneth Lau: To be honest, at the beginning, we certainly needed to understand it, including some of the early founding teams, etc. As venture capitalists, we need to understand the logic behind every project. However, when we first got involved, it was a rather crazy time, with ICO projects emerging continuously and various tokens being issued, with crypto projects springing up everywhere.

So, as a traditional venture capital fund, we were generally inclined to be conservative. Personally, I did not participate in the ICO frenzy at that time. We believed that if it was at the technical level, such as underlying blockchain technology, we would consider investing, but our participation in currency-based projects was very limited.

I would say my attitude during that phase was quite conservative.

Colin: From 2017 until now, you have experienced seven to eight years. Have your thoughts changed? Because I see you now have many positive views on Hong Kong's cryptocurrency policies in public opinion and media, hoping to promote relevant developments.

Kenneth Lau: First of all, I want to say that we have believed from the beginning that blockchain is a very important technology. About ten years ago, we were already paying attention to blockchain technology and invested in some companies providing blockchain solutions. So we value this technology highly, just like today's artificial intelligence. We were very focused on the overall development of blockchain at that time.

However, regarding the "issuing of coins," my view is that at that time, there was a lack of norms and rules, and no broad consensus had formed. You could just write a white paper and start issuing coins; I personally disagreed with this approach, which is why I did not participate in the ICO frenzy at that time. Of course, some people made money, and some lost money. But in my view, if liquidity can be created just based on a white paper, I have reservations about this approach, and I still do.

With the development of blockchain, a large number of new products have emerged. These products are not only used by a few people but are driven by a large community. Because of this, more and more people now believe that moving towards compliance is a feasible direction. A consensus is gradually forming, including the conditions for product issuance, infrastructure, etc.

So I believe this is the reason for our change in attitude. The reason many assets in this world have value is that humans assign value to them. Now, more and more people are participating in trading these new asset classes, and market consensus is gradually being established.

In the future, there will definitely be more and more standardized management mechanisms, including how products are issued, how they are traded, and how they are regulated; these are all issues that must be faced. This direction is irreversible and will only grow larger. Therefore, we must think about how to participate and how to promote.

Moreover, this is not just a matter for Hong Kong; it is a global consensus. Many countries and regions are also promoting the development of this field. So we are not trying to seize an opportunity but hope that Hong Kong can inject new vitality into this industry.

For this industry to enter the mainstream, it must rely on places like Hong Kong that have a legal foundation, financial infrastructure, professional talent, and regulatory standards to support it. Otherwise, it will always be an internal product of a community and cannot truly reach the mass market.

So I believe this is mutually beneficial. It is not that Hong Kong is eyeing Web3 to get a piece of the pie, but rather through our institutional and legal foundation, we aim to elevate the entire industry to a new level.

Historical Evolution of Hong Kong's Regulatory Path and Policy Considerations

Colin: Next, I would like to ask you to talk about Hong Kong's positioning in the cryptocurrency field. In fact, the outside world does not have a good understanding of the evolution of Hong Kong's regulatory policies. Traditionally, it seems that Hong Kong was initially in a relatively "hands-off" state. Many international companies started in Hong Kong, such as Tether, which was initially based in Hong Kong, and the now-defunct FTX was also originally set up in Hong Kong. Why did Hong Kong transition from early laissez-faire development to gradually introducing clearer regulatory regulations? What were the legislative and regulatory considerations in between? Could you share your insights?

Kenneth Lau: Actually, I do not represent the Hong Kong government, but I can share my views. I do not find this transition strange because Hong Kong has always been a very inclusive place. Many of our laws allow for experimentation as long as they are not explicitly prohibited. This has been the case for the tech industry in the past, encouraging a flourishing of ideas where everyone can try different inventions and develop various new products.

So our consistent approach is to allow innovators to freely experiment. However, when development reaches a certain stage, some things may require clearer management, and we will begin to discuss legislation and government intervention.

Similarly, Hong Kong cannot be said to have been completely "hands-off" from the beginning; a more accurate description is that we allowed the industry to develop naturally. But when problems began to emerge in the industry, everyone had to reflect: could these problems happen again? Would they impact citizens and social stability? Furthermore, does this industry have a sustainable technological foundation?

I believe we have reached a consensus that this industry will not disappear; it will only continue to develop and even attract more participants. Therefore, we must think about how to manage it and establish clearer rules and development paths for it. This was the main reason for the initial push for regulatory policies.

Moreover, as I mentioned earlier, Hong Kong actually has the ability to positively promote this industry. As early as 2022, Hong Kong released its first official statement on the development of virtual assets, which attracted significant attention. The significance of this statement was to clearly express Hong Kong's position: since this industry will continue to exist, as an international financial center, Hong Kong has the ability and responsibility to help it develop better.

From then until now, over the past two years, we can clearly see that Hong Kong is moving in the right direction. From a legal perspective, the government has provided clear guidance to many entrepreneurs and practitioners. The entire industry has gradually transitioned from a completely crypto-native circle to increasingly intersecting and integrating with traditional financial institutions.

Looking ahead, I still maintain this view: whether it is new crypto products or old traditional financial products, as long as they are financial products, they will ultimately be on-chain. This means they will be traded, recorded, and protected on the blockchain, forming a new financial infrastructure.

The term "Web3" began to be widely used in 2022, and I think it is very appropriate. Because it is not limited to crypto but encompasses broader policy concepts. Many countries still view this industry only from the perspective of crypto payments, while Hong Kong chooses to define this track with Web3, reflecting our openness and systematic thinking in policy.

This is not just about promoting crypto trading but about reforming the entire financial market through blockchain, which is a grander goal and very suitable for Hong Kong to take on the role of promotion.

Social Concerns About "Overly Tight" Policies and Reasons for Steady Development

Colin: Over the past two years, Hong Kong has introduced many policies, and the overall atmosphere is quite good. However, there is also a discussion in society that, although the government at various levels has shown a very welcoming attitude towards Web3 companies, the specific policy implementation seems to be progressing slowly or is overly tight. Especially compared to some other regions, some feel that Hong Kong's policies are too strict. What is your view on this phenomenon? How should we balance the positive aspects and the complaints?

Kenneth Lau: I think this issue is very important. There will definitely be complaints; we cannot satisfy everyone's ideas. But I have always maintained the view that to walk steadily, one must walk far. This is also our basic stance. It is not that the faster you go, the better the market will develop.

I personally believe that our current pace is one of "seeking progress while maintaining stability." Our development direction can support long-term planning for ten to fifteen years. If we suddenly open everything up and allow everyone to issue various products freely, it could lead to some chaos and even negative cases.

Of course, practitioners are currently facing many development opportunities and are very proactive, but there are many different regions globally offering various choices. The question is whether Hong Kong should compete for these development opportunities. We must be clear about our role as an international financial market.

Hong Kong has the financial system it has today, with so many financial products, high stock market valuations, and trading volumes, because people have confidence in Hong Kong. When you operate an investment market, the primary condition is that investors have confidence in you and are willing to entrust their money to you. To make this industry sustainable in the long term and become a new financial structure, we must advance steadily.

If you recklessly open up and allow the market to engage in rampant speculation and exploitation for three to five years, the end result could be a collapse of the entire market, which would not only be detrimental to Hong Kong but could also implicate the traditional financial system and severely impact Hong Kong's financial brand.

So we must conduct internal reflection and coordination. For example, if there are certain products that have been operating in other markets for many years, are relatively mature, and are linked to finance, it would be unreasonable for Hong Kong not to seriously consider whether to open up. This is why the role of the Legislative Council is important; we need to continuously evaluate existing policies.

On the other hand, from the perspective of the long-term development of Web3, we also have the responsibility to ensure that Hong Kong is moving steadily. We cannot allow policies to have no red lines, where anything goes. After all, there are many smart people in this market, and many who can quickly arbitrage. If there is a lack of regulation, it may receive external praise for a year or two, but three to five years later, the entire ecosystem could collapse, which is not the situation we want to see.

Since Hong Kong has decided to develop this industry, I personally support the government adopting a direction centered on "stability." Of course, as you mentioned, will stability turn into being too slow or too conservative? This requires us to regularly review market feedback.

I believe that the current regulatory agencies are actually responding quite quickly. For example, when there was a discussion about AETF products at the beginning of last year, they quickly understood and approved several projects within three months. As long as the products are familiar and understood by them, the approval speed is very fast.

Of course, for some innovative products that Hong Kong has not previously dealt with, the approval process will be slower. But we are continuously trying, and I hope that more and more new products can be launched in Hong Kong, while also considering potential risk factors.

The Profitability Dilemma of Compliant Exchanges in Hong Kong and International Positioning

Colin: Regarding Hong Kong's positioning in the entire cryptocurrency market, we feel that Hong Kong is somewhat similar to Singapore, unlike the U.S. or South Korea, which have large domestic markets. Compliant exchanges in the U.S. and South Korea can maintain operations and achieve considerable profits solely based on their domestic markets. However, some reports indicate that compliant exchanges in Hong Kong are almost unprofitable under the current regulatory framework, and some have been losing money for a long time. What is your view on this situation? If compliant institutions continue to lose money, how can this regulatory model be sustained?

Kenneth Lau: This industry must go through an investment process. Our goal for any industry investment is long-term development, and we hope to provide more opportunities on the product side to help the market grow.

Currently, only two or three exchanges have truly started operations, even though Hong Kong has issued 10 or 11 licenses. I have been frequently visiting Japan recently, where they have issued over forty licenses, but only a few are actually profitable. If you look at the U.S., there were many different types of exchanges in the early days, including onshore, offshore, and unlicensed ones, and none were profitable at that time. It wasn't until later that some large exchanges became profitable after restructuring.

So this is essentially a competitive process. Hong Kong has just opened up, and such early losses are to be expected. Moreover, the products here are different from those in other regions; how to classify and position them is still being explored.

For example, in Japan, there are still over 30 exchanges left, but most only offer token trading, primarily targeting the retail market. My expectation for Hong Kong is not just to trade existing products but to hope that local exchanges can launch some new, yet-to-be-released products in the future. I believe this should become one of the new sources of income for exchanges.

We need to think about how to explore new businesses and develop new "red ocean" markets, rather than getting caught up in the existing market framework. Hong Kong's positioning is as an international market; no one comes here for the local business of 7 million people. We need to think about how to push local products to a larger external market.

I think this is something we must do as soon as possible—how to push Hong Kong's exchanges and products to the global market. People should be able to launch products in Hong Kong, with audiences that are global, not just local.

Although Singapore has moved ahead of us, I do not think it is conservative. Its direction is different from Hong Kong; from the beginning, it has had many restrictions on the retail side but is open to the institutional market. Their government also supports many projects.

So I think Hong Kong can interact more with Singapore and learn from each other. Ultimately, everyone's goal is to expand the overall market and explore broader international markets, rather than being limited to local population businesses.

Views on the Issue of Too Few Tradeable Tokens for Retail Investors

Colin: Japan's regulation in the cryptocurrency field is relatively conservative; for example, every token that goes online requires approval, and they have not yet approved stablecoins. However, even so, Japan still allows retail investors to trade a large number of tokens, with different exchanges listing anywhere from dozens to hundreds of tokens. In contrast, since Hong Kong introduced its licensing system, only 4 tokens have been allowed for retail trading, which many people globally find somewhat "laughable." While we acknowledge that many tokens are of low quality, if only 4 high-quality tokens are allowed, isn't that a bit too conservative?

Kenneth Lau: This was actually mentioned earlier. To be honest, if you are only issuing tokens for the market of 7 million people in Hong Kong, it may not necessarily be profitable.

Colin: Right, but people still feel that the current number is too small, which is somewhat difficult to understand.

Kenneth Lau: Regarding the protection of retail investors, I think Hong Kong is actually similar to Singapore. You mentioned that some people come to Hong Kong to issue tokens, but if it's just for the market of 7 million people, that direction itself is not very attractive. The key is to see how to issue products in Hong Kong while also reaching different types of investors.

For example, professional investors (PIs) are abundant in Hong Kong, which may have the most family offices and professional investors in Asia. If your product is aimed at PIs and family offices, the regulation will be relatively relaxed.

However, if you are targeting retail investors, you do need to consider whether this market is worth investing in. We must be cautious with regulations for retail investors, so this will definitely need to be advanced step by step; it is not possible to open everything up at once.

Comparison with Singapore and the Idea of "Growing the Pie" in the Web3 Market

Colin: Singapore's recent policies have indeed become stricter, possibly related to its anti-money laundering requirements. They are also "driving away" some institutions in the crypto field. What is your view on this situation? Could this be an opportunity for Hong Kong? We have indeed heard that many institutions have moved back to Hong Kong from Singapore.

Kenneth Lau: I believe Hong Kong's opportunity does not lie in the policy changes of other countries but in the expansion of the entire Web3 market itself. The key is how to grow this pie, how to have more products emerge, and how to promote compliance in Hong Kong to encourage more people to come here to try, explore, and issue different types of products.

For example, we have recently passed relevant regulations regarding stablecoins, which allows many already established stablecoin projects to seek compliance paths in Hong Kong. There are already some successful stablecoins in the market, but we also need some that are government-recognized and operate within a legal framework. So our current focus is on exploring products that have not yet appeared in the market or have the potential for new variants.

As long as Hong Kong can launch attractive products, it will attract capital. In the past, much of the funding in our stock market came from overseas, including family offices and professional investors. These have always been the depth of Hong Kong's financial market.

So the key is the adaptability of new products. If you have new products, you can attract more "professional money" to invest in Hong Kong and engage more professional investors in this ecosystem, which is a very critical matter.

As for Singapore's current policy measures, I do not think they are completely abandoning this field. They are also actively promoting some projects, such as their own CBDC, and their compliance for banks and financial institutions is more in-depth than ours.

For many international institutions, holding crypto assets in Singapore is indeed more convenient than in Hong Kong, and these are areas we need to learn from. I believe that Singapore's tightening of policies may just be a short-term adjustment, but in the long run, this industry will ultimately move towards compliant development.

In the future, many countries will promote the compliance and development of the crypto industry, which has become a global trend.

Market Opportunities for Stablecoins and the Advantages of Hong Kong Dollar Stablecoins

Colin: You mentioned earlier that the hot topic this year is stablecoins. Recently, the mainland government seems to be vigorously promoting them, including offshore RMB stablecoins. Hong Kong may become the center or exporter of stablecoins in Greater China. What is your view on this matter? There are also some voices questioning whether this will be "loud thunder but little rain," as stablecoins like USDT and USDC are already very mature, with strong brand effects and many users. So, whether it is Hong Kong dollar stablecoins, U.S. dollar stablecoins, or offshore RMB stablecoins, in what aspects does Hong Kong have opportunities? Does it have competitiveness?

Kenneth Lau: First of all, I agree that stablecoins are still in a very early stage, only over the past few years. Currently, the market issuance volume is around $250 billion to $260 billion. Many market research reports predict that it could reach $1.1 trillion or even $2.1 trillion in the future. I cannot assert specific numbers, but I can say for sure that there is still a lot of room for market growth.

From the perspectives of product usability, cost, and transaction efficiency, stablecoins are very practical tools, so I believe they still have significant market development potential. In discussing stablecoins, we need to clarify one direction: we are not trying to seize the existing $250 billion market share but to expand into new user groups that have not yet been covered.

In international trade scenarios, many enterprises, especially state-owned enterprises, central enterprises, or listed companies, currently cannot accept non-compliant stablecoins. They cannot receive certain stablecoins circulating in the market, which means there is an unmet market demand.

The second point is about the potential of Hong Kong dollar stablecoins. The Hong Kong dollar itself is a currency backed by the U.S. dollar, pegged at 1:1, so the structure of Hong Kong dollar stablecoins is similar in principle to U.S. dollar stablecoins. If a U.S. credit crisis were to occur in the future, the Hong Kong dollar, in addition to being backed by the U.S. dollar, also has the financial reserves of the Hong Kong government as an additional endorsement.

I cannot say that the stability of the Hong Kong dollar is necessarily superior to that of the U.S. dollar, but at least we have dual support: the U.S. dollar and the reserves of the Hong Kong government. From the perspective of asset backing, Hong Kong dollar stablecoins may have advantages in certain aspects. Of course, whether they ultimately have market competitiveness will depend on whether users accept and are willing to use them.

But as mentioned earlier, there are still many users who have not used stablecoins, and there are also many institutions that cannot use existing U.S. dollar stablecoins. Just this incremental market alone is already quite significant.

As for how many stablecoins Hong Kong should issue, that will ultimately be decided by the Monetary Authority. But I believe that once issued, as long as the products are compliant and there is demand, there will still be many users.

Will Hong Kong Reject Unlicensed Projects and the Regulatory Outlook for DeFi

Colin: There are concerns in the industry about whether Hong Kong will, like Singapore, start to expel all unlicensed cryptocurrency practitioners in the future. Many practitioners are based in Hong Kong but do not provide services locally; their clients are outside of Hong Kong. The situation in Singapore is similar, especially with stricter management of DeFi. What is your view? Will Hong Kong also require all unlicensed projects to withdraw in the future?

Kenneth Lau: First of all, we still adhere to the policy rhythm of "moving steadily," which is the primary principle of Hong Kong's regulation. Our goal is to hope that all institutions operating in Hong Kong hold licenses. If you are operating a business in Hong Kong and promoting and selling services to local users, then you must hold a license.

If your business is based in Hong Kong but does not target the local market and instead serves overseas, it will depend on the specific circumstances. However, as long as you provide services to local citizens in the local market, you must hold a license; this is a clear direction.

Colin: What about DeFi? After all, DeFi is a permissionless system. Will Hong Kong not welcome DeFi in the future? Could it even require these projects to leave?

Kenneth Lau: Currently, there is no discussion about banning DeFi, nor is there such a policy direction. To be honest, there are not many people truly engaged in DeFi in Hong Kong right now.

We have always adhered to a market demand-oriented approach. If there is a clear demand for DeFi in the future, the government will certainly consider whether some form of regulation is needed, such as registration, licensing, and other measures. This will be determined based on market research data.

We have always conducted market research, such as asking practitioners what businesses they have developed in Hong Kong and which businesses they believe are suitable for development through licensed means. We continuously collect this feedback.

Next, we will also introduce more types of licenses, including custody licenses, dealing licenses, and so on. Relevant laws are also being revised to meet the needs of new product trading and custody models.

As for DeFi, there is currently no clear regulatory direction internationally, and the same goes for DAOs (Decentralized Autonomous Organizations), which are still in the exploratory stage. Therefore, we need to observe how the entire market develops and how future directions will evolve before deciding on our response strategies.

Hong Kong's Role and Technical Talent Layout under the "Front Store, Back Factory" Model

Colin: In the current context of U.S.-China relations, many hope that Hong Kong can become an export hub for Web3 in Greater China. Currently, many companies are adopting the "front store, back factory" model, where executives, owners, or core teams are based in Hong Kong, while technical teams or backend operations are located in Shenzhen, mainland China, Hangzhou, and other places. What is your view on this Web3 model? What role does Hong Kong play in it?

Kenneth Lau: This model has actually taken shape. In the development process from blockchain to cryptocurrency, many participants, especially those working on hard technology, are mostly Chinese. Most of the developers and technical teams I have encountered come from the Chinese community, so the voice of Chinese people in this industry is very strong.

Technical development itself requires continuous innovation. In this regard, Hong Kong's advantage lies in its strong financial sector, which has many excellent professionals. Therefore, how to combine talent from both finance and technology is, in my opinion, the greatest potential for Hong Kong's development of Web3.

Additionally, as you mentioned, Japan and South Korea are more like independent markets. In contrast, Hong Kong and Singapore are more closely positioned as one of the financial hubs of Asia. Although Singapore moves quickly, its financial market depth and scale of flow are not as significant as Hong Kong's, which has a larger pool of funds and product systems.

The Middle East started early in Web3 and is more willing to take risks, but in terms of product management levels and international market credibility, there is still a significant gap compared to Hong Kong.

Therefore, from the perspective of the overall development of Web3, I believe that as long as Hong Kong can maintain its development speed while being steady and solid, it can maintain an important position in Asia.

Reasons for the Conservative Attitude of U.S. Web3 Giants Toward Hong Kong and Response Strategies

Colin: Indeed, we have observed in practice that top U.S. Web3 companies, such as Coinbase and Circle, have set up their Asia-Pacific headquarters in Singapore. They seem to be cautious about Hong Kong and have some concerns. What is your view on this? Should Hong Kong be more proactive in attracting these leading U.S. companies, or should it continue to focus on serving Greater China?

Kenneth Lau: This issue actually involves many layers, especially some external factors. There are some things we can control, and some that we cannot. We can only do our best within the controllable range.

Our attitude toward companies from different countries overseas has always been open and is not limited to any specific country. I can clearly say that Hong Kong still has companies from all over the world operating here, and there are people from various backgrounds living here, including many from Europe and the U.S.

So from a historical perspective, the current situation is just a small point in the long river of history. The situation ten years ago was different from now, and we cannot predict what it will be like ten years from now. Therefore, we will not make strategic adjustments due to temporary changes in international relations.

I believe Hong Kong must adhere to its friendly and open stance toward the international market, which is one of the fundamental reasons for our past success. Especially in the area of Web3, we can only focus on solidifying our foundation.

For example, regarding our legislative system, if there are areas where we are not doing well, we will discuss them with the relevant regulatory agencies; we will actively promote what we can, and accept reality for what we cannot promote. At the same time, we need to pay attention to what products can be innovated and launched in Hong Kong in the future, and how to develop these products within a compliant framework. These are the most important matters at present.

It is difficult to predict how Web3 will develop in the future. Just like artificial intelligence, while continuously pushing for technological breakthroughs, it is also influencing the entire landscape of Web3.

Therefore, no one can accurately predict what the market will look like in five years. I believe the most critical thing for Hong Kong right now is to maintain our openness and freedom. This includes the almost zero threshold for international capital entering Hong Kong.

These have always been important assets for Hong Kong to establish itself on the global fintech stage. As for external matters that we cannot control, we can only go with the flow; what Hong Kong can do is to focus on doing its own things well.

Hong Kong's Potential in Stock Tokenization and Legal Barriers

Colin: Regarding stock tokenization, this topic has been very hot recently, especially with many U.S. stock tokenization projects being launched one after another. Some scholars from the mainland have also suggested whether Hong Kong stocks or mainland stocks can be tokenized to allow more global investors to participate. However, when I discussed this with friends yesterday, someone mentioned that Hong Kong's laws seem to stipulate that only the Hong Kong Stock Exchange can conduct stock trading. Does this mean that this path is legally closed off? What is your view? Is there a possibility of some innovative products in this area?

Kenneth Lau: I believe this is definitely a process that requires interaction, and it also depends on the overall market direction. Indeed, there are local practitioners in Hong Kong who have proposed suggestions for tokenization.

Regarding the legal issues, I believe that some of the current regulations are products of the past. The legal framework at that time did not consider the trends of today's technological development, nor did it foresee the emergence of trading stocks and other equity products using tokens or blockchain technology.

Therefore, whether tokenization can be promoted in the future will depend on the development of the entire market. My personal view is that I hope that in 10 or 15 years, not only stocks but all traditional assets, including bonds and hard assets, can achieve on-chain trading. This can eliminate a lot of intermediaries, reduce costs, and build a more efficient financial market structure.

This is precisely the potential of blockchain, but achieving this will take time and depend on technological development. If there are issues with technology along the way, such as hacking attacks or security vulnerabilities, these could also undermine the confidence of the entire market.

Technology will continue to advance, but more importantly, it must instill confidence in users. Only when everyone trusts this technology can all financial products truly achieve on-chain status. If technology regresses, the entire vision of tokenization may also be forced to slow down.

Therefore, I believe this process needs to be approached step by step, continuously observing market demand and technological capabilities, and then promoting corresponding innovations and regulatory adjustments.

Colin: Currently, it is still in the discussion stage and has not yet reached a level that can be practically promoted.

Kenneth Lau: I do think that relevant topics have indeed been raised, but we are still in the preliminary stage.

The Strategic Significance of Hong Kong's Development of Web3 and Its Complementary Relationship with the Mainland

Colin: Finally, let me ask one more question. You mentioned earlier that the U.S. has now placed artificial intelligence and blockchain on the same strategic level, with its "tech czar" responsible for both fields. However, if Hong Kong develops AI, it will clearly face fierce competition for talent from places like Hangzhou, Beijing, and Shanghai in the mainland. Hong Kong may not have a clear advantage in this regard. But in the Web3 field, Hong Kong has a unique advantage, especially considering the regulatory restrictions in the mainland. Hong Kong can meet the demand and talent for Web3 in Greater China. How do the Hong Kong government, legislators, or senior officials view Web3? Is it seen as an important pillar for Hong Kong's future revival, or just a part of ordinary industry development?

Kenneth Lau: I must clarify again that I personally emphasize that Hong Kong cannot and should not compete with the mainland. We have never been in a competitive relationship; rather, we are in a complementary relationship. From the past "three comes and one supplement" model to later helping mainland enterprises raise funds and list in Hong Kong, and now we hope to assist mainland tech companies in "going global" by establishing standards through Hong Kong and connecting with the international community, this has always been a path of cooperation.

Hong Kong should become a window for mainland technology, helping Chinese enterprises establish trustworthy standards internationally, including how artificial intelligence handles data and how to build secure language models (LM), all of which rely on Hong Kong's bridging role.

As you said, developing an AI engine may require thousands or tens of thousands of tech talents, and Hong Kong currently does not have such a technical manpower foundation. We naturally do not view this issue with a competitive mindset. What Hong Kong needs to do is empower mainland enterprises and form a collaborative relationship with the mainland, especially in coordination with Shenzhen. I never see any "competition" here; rather, it is about jointly promoting development.

If people are still stuck in the old mindset of "Hong Kong needs to compete with the mainland," they are indeed misled by some public opinion or media. Sometimes the outside world loves to use exaggerated terms like "ruins," but we do not need to pay attention to these voices. What is important is to recognize the direction and focus on doing the work. When encountering issues related to laws, market access, regulatory mechanisms, etc., if they are reasonable, we will promote reform.

Hong Kong has always been successful in this way—when things are done well, people praise you; when facing storms, the outside world may criticize you. Being too concerned about external evaluations can waste energy.

I believe this government is actually very efficient in legislation, whether it is related to Web3, cybersecurity, or data protection. Progress is rapid. The core issue behind AI is data, and data governance must meet international standards. Hong Kong can provide support for the country's development of artificial intelligence in this regard.

So I am not worried at all about the so-called "competition." We just need to find our positioning in the national technology strategy map, see where we can participate, and where we can contribute to the country's development, focusing on doing this part well, which is the most important thing.

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