Editor | Wu Talks about Blockchain

This article is an interview with Hong Kong Legislative Council member Dagen Qiu by Colin Wu. Mr. Qiu elaborated on his understanding and promotion logic of Web3 and the cryptocurrency industry, and reviewed his personal journey from technology venture capital to supporting the development of blockchain. He emphasized the importance of blockchain technology and explained the evolution of Hong Kong from "tolerant experiment" to the formulation of clear regulatory policies. He believed that a steady regulatory strategy would help enhance market confidence and avoid short-term speculation that would harm Hong Kong's financial brand. At the same time, Mr. Qiu also talked about the comparative advantages of Hong Kong with Singapore, Japan and other regions, and believed that Hong Kong should focus on developing the international market and building a financial product innovation center. He pointed out that stablecoins, compliant exchanges and on-chain financial infrastructure are the key to Hong Kong's next stage of development, and emphasized that Hong Kong should remain open in its international positioning and play a complementary relationship with the mainland, rather than competing. Finally, he emphasized that Hong Kong's promotion of Web3 is not based on short-term economic considerations, but to help the industry's sustainable development from an institutional basis.

Looking back on my personal experience from venture capital to legislation, when I first came into contact with cryptocurrency

Colin: Today we have invited Councillor Chiu, a member of the Hong Kong Legislative Council. He is one of the most supportive members of Hong Kong for Web3 and has expressed many relevant views. Recently, the overall support for Web3 in Hong Kong and the atmosphere of public opinion are very high. Today we have some questions to ask Councillor Chiu to discuss the current situation in Hong Kong and how it should develop in the future.

First of all, could you please introduce yourself and when did you first come into contact with cryptocurrencies? When did you first buy Bitcoin?

Qiu Dagen: I am a member of the seventh Legislative Council of Hong Kong, representing the technological innovation sector. Before entering the Legislative Council, I had been engaged in technology venture capital. It can be said that for more than 20 years, I have been engaged in investment business through my family business and the funds I established later. In 2021, I started to participate in the Legislative Council and served as a member of the seventh term.

If I were to say that I first came into contact with cryptocurrency, it was probably around 2014 or 2015. At that time, we often went to the United States for fund management, and the United States began to explore this field relatively early. At that time, blockchain technology had just emerged, and Ethereum, Bitcoin, etc. had just begun to attract attention. It was probably around 2015 or 2016, when there was also a period of ICO fever, and many different token projects were being issued in the United States.

But because we were running a more traditional technology fund at the time, even though we had a venture capital background, we were still relatively conservative, so we didn’t participate too much in these token projects.

I personally tried to buy and sell Bitcoin at that stage, mainly to experience the operation process. I can’t say that I was deeply involved in the cryptocurrency circle, but I was just observing and paying attention to how this field gradually developed.

Early Conservative Attitudes and Technology Focus on Cryptocurrencies

Colin: Over the years, when you first came into contact with or began to observe cryptocurrency and blockchain, what were your thoughts or ideas? Did you have a positive attitude at the beginning? Or did you feel that this industry was quite confusing and had some problems?

Qiu Dagen: To be honest, we certainly had to understand it at the beginning, including some very early founding teams. We would understand all of them. As a venture capitalist, we have to understand the logic behind all projects. But it is true that when we first came into contact, that period was quite crazy, with ICO projects constantly emerging, various tokens being issued, and Crypto projects emerging in an endless stream.

Therefore, as a traditional venture capital fund, we tend to be conservative overall. I personally did not participate in the ICO wave at that time. We believe that if it is at the technical level, such as the underlying technology of blockchain, we will consider investing, but for the participation of currency-based, we still participate very little.

It can be said that my attitude at that stage was conservative.

Colin: It has been seven or eight years since 2017. Have your thoughts changed? Because I see that you now have many positive views on Hong Kong's cryptocurrency policy in public opinion and media, and hope to promote related development.

Qiu Dagen: First of all, I want to say that we have believed that blockchain is a very important technology from the beginning. About ten years ago, we have been paying attention to blockchain technology and have invested in some companies that provide blockchain solutions. So we value this technology itself very much, just like artificial intelligence today. At that time, we paid close attention to the development of the entire blockchain.

When it comes to the issue of “coin issuance”, my opinion is that there was a lack of norms and rules at that time, and there was no broad consensus. You could just write a white paper and start issuing coins. I personally disagree with this approach, so I did not participate in the ICO craze at that time. Of course, some people made money and some lost money at that time. But in my opinion, if liquidity can be created just by a white paper, I have reservations about this approach, and I still have reservations until now.

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

So I think this is the reason why our attitude has changed. The reason why many assets in this world have value is because humans give them value. Now more and more people are participating in the trading of these new asset classes, and the market consensus is gradually established.

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

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.

If this industry wants to enter the mainstream, it must rely on places like Hong Kong that have a legal basis, financial basis, professional talents and regulatory standards to support it. Otherwise, it will always be just a product within the community and cannot really enter the mass market.

So I think this is mutually beneficial. It’s not that Hong Kong wants to get a piece of the pie because of Web3, but through our system and legal basis, we can bring the entire industry to a new level.

The historical evolution and policy considerations of Hong Kong's regulatory path

Colin: Next, I would like to ask you about Hong Kong's position in the crypto space. In fact, the outside world does not know much about the evolution of Hong Kong's regulatory policies. In the traditional impression, Hong Kong seems to have been in a state of "hands-off governance" at first. Many large international companies have started in Hong Kong, such as Tether, which was originally in Hong Kong, and the once popular FTX was actually originally located in Hong Kong. So why did Hong Kong gradually transition from the early laissez-faire development to the current introduction of various clearer regulatory laws and regulations? What are the considerations of the legislative and regulatory levels in the middle? Can you introduce it to us?

Qiu Dagen: Actually, I don't represent the Hong Kong government, but I can talk about my views. I don't think this change is strange, because Hong Kong has always been a very tolerant place. Many of our laws are basically open to experimentation as long as they are not explicitly prohibited. This was also the case with the technology industry in the past, encouraging a hundred flowers to bloom, and everyone could try different inventions and develop various new products.

So our usual approach is that people who are willing to innovate are free to try. But when things develop to a certain stage and may need more explicit management, we will start discussing issues such as legislation and government intervention.

Similarly, Hong Kong cannot be said to have completely “governed by doing nothing” at the beginning. It is more accurate to say that we let the industry develop naturally. But when some problems begin to appear in the industry, everyone must reflect: Will these problems happen again? Will they have an impact on citizens and social stability? Furthermore, does this industry have the technical foundation to continue to exist?

I think we have reached a consensus that this industry will not disappear, but will continue to develop and even attract more people to participate. Therefore, we must think about how to manage it and formulate clearer rules and development paths for it. This was the main reason for the introduction of regulatory policies.

And as I said before, Hong Kong actually has the ability to bring positive impetus to this industry. As early as 2022, Hong Kong issued its first official statement on the development of virtual assets, which attracted a lot of attention at the time. The significance of this statement is that it clearly expresses 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.

In the more than two years since then, we can clearly see that Hong Kong is moving in the right direction. From a legal perspective, the government has given many entrepreneurs and practitioners clear guidance. The entire industry has also gradually evolved from a completely Crypto Native circle to one that has increasingly intersected and integrated with traditional financial institutions.

Looking back, I still hold this view: whether it is a new product of encryption or an old product of traditional finance, as long as they are financial products, they will eventually be put on the chain. This means that they will all be traded, recorded, and protected on the blockchain, which will form a brand new financial infrastructure.

The name "Web3" began to be widely used in 2022, which I think is very appropriate. Because it is not limited to Crypto, but includes a broader policy concept. Many countries still only view this industry from the perspective of encrypted payments, while Hong Kong chooses to use Web3 to define this track, which reflects our open and systematic thinking in policy.

This is not just about promoting the buying and selling of Crypto, but about reforming the entire financial market through blockchain. This is a more ambitious goal and is very suitable for Hong Kong to play a role in promoting it.

Social doubts about "overly tight policies" and reasons for steady development

Colin: Hong Kong has introduced many policies in the past two years, and the overall atmosphere is good. However, there is also a discussion in society that although the government at all levels has shown a very welcoming attitude towards Web3 companies, the implementation of specific policies seems to be slow or tight. Especially compared with some other regions, some people think that Hong Kong's policies are too strict. What do you think of this phenomenon? How to balance the good aspects and the aspects that everyone complains about?

Qiu Dagen: I think this question is very important. There will definitely be complaints, and we cannot satisfy everyone. But I have always insisted that if you walk steadily, you can go far. This is also our basic position. It does not mean that the faster you walk, the better the market will develop.

I personally think that our current pace is "seeking progress in a stable manner". Our development direction is to support long-term planning for ten or fifteen years. If we open up all of it at once and allow everyone to launch various products here at will, it is likely to cause some confusion and even negative cases.

Of course, practitioners are now facing many development opportunities and are very positive, but there are many different regions in the world that offer various options. The question is, should Hong Kong compete for such development opportunities? We must be clear about our role as an international financial market.

Hong Kong has today's financial system, with so many financial products, such high stock market valuations and trading volumes, because people have confidence in Hong Kong. When you are in the investment market, the first condition is that investors have confidence in you and are willing to give you their money. To make this industry sustainable in the long term and become a new financial structure, it must be steadily advanced.

If you rashly let go and allow the market to speculate wildly and cut leeks within three to five years, the end result may be the collapse of the entire market. Not only will it be unhelpful to Hong Kong, it may also implicate the traditional financial system and have a serious impact on Hong Kong's financial brand.

Therefore, we must do a good job of internal review and coordination. For example, if Hong Kong does not seriously consider whether to open up certain products that have been operating in other markets for many years and are relatively mature and linked to finance, it would be unreasonable. This is why the role of the Legislative Council is important. We must constantly evaluate the current 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 on a steady path. We cannot allow policies to be without red lines and allow anything to be done. After all, there are too many smart people in this market, and many people who are capable of quick arbitrage. If there is a lack of supervision, it may be praised by the outside world in one or two years, but the entire ecosystem may collapse in three to five years. This is not the situation we want to see.

Since Hong Kong has decided to develop this industry, I personally support the government's adoption of a "stable" approach. Of course, as you mentioned, will stability become too slow and too conservative? This requires us to regularly review market feedback.

I think the current regulatory agencies are actually very responsive. For example, when everyone was discussing AETF products at the beginning of the year before last, they understood it very quickly and approved multiple projects within three months. As long as it is a product they are familiar with and understand, the approval speed is very fast.

Of course, some innovative products that Hong Kong has never done before will be approved more slowly. But we are also constantly trying, and I hope that more and more new products can be launched in Hong Kong, but potential risks must also be taken into account.

Hong Kong's compliant exchanges' profitability problems and international positioning

Colin: Regarding Hong Kong's position in the entire crypto market, we think Hong Kong is more like Singapore, and does not have a large domestic market like the United States or South Korea. Compliance exchanges in the United States and South Korea can maintain operations and make considerable profits by relying solely on the domestic market. However, there are some reports that compliance exchanges in Hong Kong are almost unprofitable or even lose money for a long time under the current regulatory framework. What do you think of this situation? If compliance institutions keep losing money, how can this regulatory model be maintained?

Qiu Dagen: This industry must go through an investment process. Our investment in any industry is aimed at long-term development. We also hope to provide more opportunities on the product side to expand the market.

Currently, there are only two or three exchanges that have actually started operations, although Hong Kong has issued 10 or 11 licenses. I have been to Japan recently, and they have issued more than 40 licenses, but only a few of them are really profitable. If you look at the United States, there were also many different forms of exchanges in the early days, including onshore, offshore, and unlicensed, and none of them were profitable at the time. It was not until the later rectification that some large exchanges with good profits emerged.

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

Take Japan for example, they still have more than 30 exchanges, but most of them only provide token trading, mainly for the retail market. My expectation for Hong Kong is not only to trade existing products, but also to launch some new products that have not yet been released in the future. I think this should become one of the new sources of income for exchanges.

We need to think about how to develop new businesses and new "red ocean" markets, rather than involution in the old market framework. Hong Kong is positioned as an international market, and no one comes here for the local business of 7 million people. We need to think about how to promote local products to a larger external market.

I think this is what we must do as soon as possible next - how to promote Hong Kong's exchanges and products to the global market. You should be able to launch products in Hong Kong, and the audience of these products is global, not just local.

Although Singapore started earlier than us, I don't think it is conservative. Its direction is different from Hong Kong. From the beginning, there are many restrictions on the retail side, but it is open to the institutional market. Their government also supports many projects.

So I think Hong Kong and Singapore can also interact more and learn from each other. Ultimately, everyone's goal is to expand the entire plate and open up a wider international market, rather than just limiting business to the local population.

Views on the problem of too few tokens available for retail investors to trade

Colin: Japan’s regulation in the field of cryptocurrency is relatively conservative. For example, every token needs to be approved before it is launched, and stablecoins have not been approved yet. But even so, Japan still allows retail investors to trade a large number of tokens, and the number of tokens listed on different exchanges ranges from dozens to hundreds. Since the launch of the license in Hong Kong, there are only 4 tokens that retail investors are allowed to trade, which is actually considered a bit "funny" by many people around the world. Although we admit that many tokens are not of high quality, if only 4 high-quality tokens are allowed, isn’t that a bit too conservative?

Qiu Dagen: I mentioned this just now. To be honest, if you only issue coins for the 7 million people in Hong Kong, you may not make money.

Colin: Yes, but everyone still feels that the current number is too small and somewhat difficult to understand.

Qiu Dagen: I think Hong Kong and Singapore are similar in terms of protecting retail investors. You said that some people come to Hong Kong to issue coins, but if it is just for the market of 7 million people, then this direction itself is not very attractive. The key is to see how to issue products in Hong Kong and reach other different types of investors at the same time.

For example, Hong Kong is probably the place with the most family offices and professional investors in Asia. If your product is aimed at PIs and family offices, the supervision will be relatively relaxed.

But if you want to target retail investors, you really have to consider whether this market is worth investing in. We must be cautious in regulating retail investors, so this must be done step by step, and it is impossible to open up all at once.

Comparison with Singapore and the idea of "making the pie bigger" in the Web3 market

Colin: Singapore's recent policies have indeed become stricter, which may be related to its anti-money laundering requirements. They are also "driving away" some institutions in the crypto field. What do you think of this situation? Will this be an opportunity for Hong Kong? We have indeed heard that many institutions have moved back to Hong Kong from Singapore.

Qiu Dagen: I think the opportunity for Hong Kong 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 make this pie bigger, how to have more products appear, and how to promote compliance in Hong Kong so that more people are willing to come here to try, explore, and issue different types of products.

For example, we have just recently passed the relevant regulations on stablecoins, which allows many relatively large stablecoin projects to seek compliance paths in Hong Kong. There are already some successful stablecoins on the market, but we also need some stablecoins that are recognized by the government and operate under the legal framework. So our focus now is on exploring products that have not yet appeared in the market or have the possibility of new variants.

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

So the key is the adaptation of new products. If you have new products, you can attract more "professional money" to invest in Hong Kong and attract more professional investors to participate in this ecosystem. This is a very critical thing.

As for Singapore's current policy measures, I don't think they are completely giving up on this area. They are actually actively promoting some projects, such as their own CBDC, and the compliance access of banks and financial institutions is also more in-depth than ours.

It is indeed more convenient for many international institutions to hold crypto assets in Singapore than in Hong Kong, and these are areas we need to learn from. I think Singapore’s current tightening of policies may only be a short-term adjustment, but in the long run, the industry will eventually move towards compliance development.

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

Market opportunities for stablecoins and advantages of Hong Kong dollar stablecoins

Colin: You just mentioned that the hot topic this year is stablecoins. Recently, the mainland government seems to be vigorously promoting stablecoins, including offshore RMB. And Hong Kong may become the center or export of stablecoins in the entire Greater China region. What do you think of this? Now there are also some voices questioning whether this will be "much ado about nothing", because USD stablecoins such as USDT and USDC are already very mature, with strong brand effects and many users. So whether it is a Hong Kong dollar stablecoin, a US dollar stablecoin, or an offshore RMB stablecoin, what opportunities does Hong Kong have? Is it competitive?

Qiu Dagen: First of all, I agree that stablecoins are still in a very early stage, just a few years. The current market issuance volume is about 250 to 260 billion US dollars. Many market research reports predict that it may reach 1.1 trillion or even 2.1 trillion in the future. I dare not assert the specific number, but what is certain is that the market still has a lot of room for growth.

From the perspective of product availability, cost, transaction efficiency, etc., stablecoins are very practical tools, so I believe they still have great market development potential. In the process of discussing stablecoins, we have a clear direction: not to grab the existing $250 billion market share, but to expand new user groups that have not yet been covered.

In international trade scenarios, many companies, especially state-owned enterprises, central enterprises or listed companies, are currently unable to accept non-compliant stablecoins. They are unable to receive certain stablecoins currently circulating in the market, which means there is an unmet market demand.

The second point is about the potential of the Hong Kong dollar stablecoin. The Hong Kong dollar itself is a currency backed by the US dollar and is pegged to the US dollar at a 1:1 ratio, so the structure of the Hong Kong dollar stablecoin is similar in principle to the US dollar stablecoin. If a US dollar credit crisis really occurs in the future, the Hong Kong dollar will not only be backed by the US dollar, but also by the Hong Kong government's fiscal reserves as an additional endorsement.

I dare not say that the stability of the Hong Kong dollar is definitely better than that of the US dollar, but at least we have dual support: the US dollar and the Hong Kong government's reserves. If we only look at it from the perspective of asset backing, the Hong Kong dollar stablecoin may have more advantages in some aspects. Of course, whether it will eventually be competitive in the market depends on whether users accept it and are willing to use it.

But as I just said, there are still many users who have not yet used stablecoins, and there are also many institutions that are currently unable to use existing US dollar stablecoins. This new incremental market alone is already not small.

As for how much Hong Kong should issue, this is still subject to the final decision of the Hong Kong Monetary Authority. But I think that once it is issued, as long as the product is compliant and there is demand, there will still be many users.

Will Hong Kong exclude unlicensed projects and the regulatory prospects of DeFi?

Colin: Now some people in the industry are worried whether Hong Kong will start to clear out all unlicensed cryptocurrency practitioners in the future, just like Singapore? Because many practitioners are based in Hong Kong, but they do not provide services locally. They serve areas outside Hong Kong. The situation in Singapore is similar, especially the stricter management of DeFi. What do you think? Will Hong Kong also require all unlicensed projects to withdraw in the future?

Qiu Dagen: First of all, we still adhere to the policy rhythm of "steady progress", which is the primary principle of Hong Kong supervision. Our goal is to hope that all institutions doing business in Hong Kong are licensed. If you operate a business in Hong Kong and promote and sell services to local users, then you must hold a license.

If your business is located in Hong Kong but does not serve the local market but serves overseas, it depends on the specific situation. However, as long as you provide services to local citizens in the local market, you must be licensed. 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? Maybe even ask these projects to leave?

Qiu Dagen: There is no discussion about banning DeFi, nor is there any such policy direction. To be honest, there are not many people who are actually engaged in DeFi in Hong Kong.

We have always been guided by market demand. If there is a clear demand for DeFi in the market in the future, the government will certainly consider whether some form of regulation is needed, such as registration, licensing, etc. This will be determined based on market research data.

We have been conducting market research, for example, asking practitioners what businesses they have developed in Hong Kong and which businesses they think are suitable for development through licensing. We continue to collect such feedback.

We will also launch more types of licenses in the future, including custody licenses, dealing licenses, etc. Relevant laws are also being revised to meet the needs of new product transactions and custody models.

As for DeFi, there is no clear regulatory direction internationally at present. Like DAO (decentralized autonomous organization), it is still in the exploratory stage. So we still have to see how the entire market develops and how the future direction will evolve before deciding on a response strategy.

Hong Kong's role and technical talent layout under the "front shop, back factory" model

Colin: Under the current Sino-US situation, many people hope that Hong Kong can become an outlet for Web3 in Greater China. At present, many companies also adopt the "front shop and back factory" model, where executives, bosses or core teams are located in Hong Kong, but technical teams or back-end operations are located in Shenzhen, the mainland, Hangzhou and other places. What do you think of this Web3 model? What role does Hong Kong play in it?

Qiu Dagen: This model has actually taken shape. In the current 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 come into contact with are from the Chinese community, so in this industry, the Chinese have a very strong voice.

Technology development itself requires continuous innovation. In this regard, Hong Kong's advantage lies in its strong financial circle with many excellent professionals. So how to combine talents in finance and technology is what I think is the biggest potential for Hong Kong to develop Web3.

In addition, you just mentioned Japan and South Korea, which are more like independent markets. Hong Kong and Singapore are more similar in positioning, and are one of the financial hubs in Asia. In comparison, although Singapore is fast, the depth and flow of its financial market are not as good as Hong Kong, which has a larger capital pool and product system.

Although the Middle East started early in Web3 and is more willing to take risks, there is still a clear gap between it and Hong Kong in terms of product management level and credibility in the international market.

So from the perspective of the development of the entire Web3, I believe that as long as Hong Kong can maintain its development speed and proceed steadily, it will be able to maintain its important position in Asia.

Reasons and countermeasures for the conservative attitude of American Web3 giants towards Hong Kong

Colin: Indeed, we have observed in our actual work that the top American Web3 companies, such as Coinbase and Circle, have their Asia-Pacific headquarters in Singapore. However, they seem to be cautious about Hong Kong and have some concerns. What do you think about this? Should Hong Kong be more active in attracting these top American companies? Or should it continue to focus on serving Greater China?

Qiu Dagen: This question actually involves many aspects, especially some external factors. Some things we can control, and some we cannot. We can only do our own things well within the controllable range.

Our attitude towards companies from different countries has always been open, not limited to any particular country. I can clearly say that Hong Kong still has companies from all over the world operating here, and people from all kinds of backgrounds living here, including many companies and talents from Europe and the United States.

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

I think Hong Kong must remain friendly and open to 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 laying a solid foundation.

For example, if there are any areas in our legislative system that are not done well enough, we will discuss with relevant regulatory agencies; we will actively promote what can be promoted, and accept the reality if we cannot promote it. At the same time, we must also pay attention to what products can be innovated in Hong Kong in the future, and how to make these products develop within a compliant framework. These are the most important things at present.

It is difficult to predict how Web3 will develop in the future. Just like artificial intelligence, while constantly promoting technological breakthroughs, it is also affecting the entire Web3 landscape.

Therefore, no one can predict what the market will be like in five years. I think the most important thing for Hong Kong now is to maintain our openness and freedom. This includes free opening to the international market and almost zero threshold for international capital to enter Hong Kong.

These have always been important assets for Hong Kong to gain a foothold in the global financial technology arena. As for external things that we cannot control, we can only let nature take its course. What Hong Kong can do is to do its best.

Hong Kong’s potential and legal barriers to stock tokenization

Colin: Regarding the tokenization of stocks, this topic has been very popular recently, especially with the launch of many tokenization projects for US stocks. Some mainland scholars have also proposed whether Hong Kong stocks or mainland stocks can also be tokenized to allow more global investors to participate. However, when I was discussing with my friends yesterday, someone mentioned that Hong Kong law seems to stipulate that only the Hong Kong Stock Exchange can trade stocks. Does this mean that this path is legally blocked? What do you think? Is it possible to have some innovative products in this regard?

Qiu Dagen: I think this is definitely an interactive process, and it also depends on the direction of the entire market. Indeed, there are also practitioners in Hong Kong who have proposed suggestions on the direction of tokenization.

Regarding the legal issue, I think some of the current regulations are a product of the past. The legal framework at that time did not take into account the development trend of technology today, nor did it foresee the emergence of a way to buy and sell equity products such as stocks using tokens or blockchain technology.

Therefore, whether tokenization can be promoted in the future depends on the development of the entire market. My personal opinion is that I hope that in 10 or 15 years, not only stocks, but all traditional assets including bonds, hard assets, etc. can be traded on the chain. This can save a lot of intermediate links, reduce costs, and build a more efficient financial market structure.

This is exactly the potential of blockchain, but it will take time to realize this and it also depends on the development of technology. If there are some problems with the technology in the middle, such as hacker attacks, security vulnerabilities, etc., these may also constitute a blow to the confidence of the entire market.

Technology will continue to improve, but more importantly, it must give users confidence. Only when everyone trusts this technology can all financial products be truly on-chain. If technology goes backwards, the entire tokenization vision may be forced to slow down.

So, I think this process needs to be carried out step by step, continuously observing market demand and technological capabilities, and then promoting corresponding innovation and regulatory adjustments.

Colin: It is still in the discussion stage recently and has not yet reached the level where it can be actually promoted.

Qiu Dagen: I think some people have indeed raised relevant issues, but it is still in the preliminary stage.

The strategic significance of Hong Kong’s development of Web3 and its complementary relationship with the Mainland

Colin: Finally, one more question. You just mentioned that the United States has now placed artificial intelligence and blockchain at the same strategic level, and its "Tech Czar" is also responsible for these two fields. But if Hong Kong develops AI, it will obviously face fierce competition for talent in places such as Hangzhou, Beijing, and Shanghai in the Mainland. Hong Kong may not have a clear advantage in this regard. But the Web3 field is Hong Kong's unique advantage, especially considering the regulatory restrictions in the Mainland, Hong Kong can undertake the needs and talents of the entire Greater China region in Web3. So 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 is it just part of the development of an ordinary industry?

Qiu Dagen: I must make it clear again. I have always stressed that Hong Kong cannot and should not compete with the mainland. We have never been in a competitive relationship, but a complementary relationship. From the past "three-in-one" model, to helping mainland companies raise funds and go public in Hong Kong, to now we hope to help mainland technology companies "go overseas", set standards through Hong Kong, and connect with the international community. This has always been a path of cooperation.

Hong Kong should become a window for mainland technology. We should help Chinese companies establish trustworthy standards internationally, including how artificial intelligence processes data and how to build secure language models (LM). All of these are inseparable from Hong Kong's role as a bridge.

As you said, developing an AI engine may require thousands or tens of thousands of scientific and technological talents, and Hong Kong does not currently have such a technical human resource base, so we naturally do not view this issue with a competitive mindset. What Hong Kong needs to do is to empower mainland enterprises and form a collaborative relationship with the mainland, especially with Shenzhen. I never think there is any "competition", but rather a joint promotion of development.

If everyone still sticks to the old idea that "Hong Kong must compete with the mainland", then they are indeed misled by some public opinion or media. The outside world sometimes likes to use exaggerated words such as "ruins", but we don't need to pay attention to these voices. The important thing is to identify the direction and work hard. When encountering problems in terms of laws, market access, and regulatory mechanisms, if they are reasonable, we will promote reforms.

Hong Kong has always been successful in this way - when you do well, everyone praises you; when you encounter difficulties, the outside world criticizes you. Paying too much attention to these external evaluations is a waste of energy.

I think this government is very efficient in legislation, whether it is Web3, cybersecurity, or data protection legislation, progress has been 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 about the so-called "competition" at all. We just need to find our position in the national science and technology strategy, see clearly where we can participate and where we can support national development, and focus on doing this well. This is the most important thing.