Hong Kong Legislative Council Member Wu Jiezhuang: Jointly promote "Virtual Asset Bank" from the perspective of operation, supervision and Web3

Source: Ta Kung Pao

Hong Kong SAR Legislative Council member Wu Jiezhuang published an article in Ta Kung Pao, "Inside and outside the parliament / tripartite joint efforts to develop "Virtual Asset Bank"", the article pointed out that it is necessary to comprehensively To revitalize virtual banking services, it is recommended that we jointly promote it from three levels. The following is the full text of the content:

The "disruptive innovation" caused by the integrated application of emerging technologies has promoted the rapid development of financial technology, and virtual assets have also become an important part of the future financial sector. In Hong Kong, the government has set the goal of establishing a global virtual asset center and has also introduced a series of regulatory rules to orderly build a virtual asset ecosystem. Virtual assets are an unavoidable market for banks, but there are difficulties in opening accounts and business problems. and functional limitations. The author suggests that the government can jointly promote "virtual asset banks" from the perspective of operation, supervision and Web3 to improve the quality and quantity of financial services and create a market environment that facilitates investment.

Provide more innovative virtual financial products

Financial technology is a major trend in market development. It basically applies innovative virtual technologies such as Web3, AI, blockchain, cloud computing and big data. , reducing the costs, time and processes required for traditional physical financial services, thereby forming a "new economy". As Hong Kong’s banking system is mature and its banking business foundation is solid, and regulatory agencies also maintain an open and inclusive attitude toward banks’ participation in virtual asset-related businesses, various sectors have long believed that virtual banks will bring new changes to Hong Kong’s financial services industry and status as an international financial center. New momentum, some virtual banks were optimistic about the return period of only about 3-5 years in the early stages of their establishment. Unfortunately, all eight virtual banks that have been opened are still "burning money" and losing money, which has also affected the financial technology and virtual asset markets. The financial support is insufficient and the overall development is affected.

As for virtual banks hitting a wall in the market, the author believes that the main pain points are the lack of unique business scope and insufficient financial innovation products, which prevents the market from expanding. The more homogeneous price competition seriously erodes operations. Profits; coupled with the difficulty of opening an account due to the need to prevent fraud and "money laundering", the customer base cannot be expanded. In addition, some traditional banks are worried about the possible loss of customers and leakage of data privacy, and lack the motivation to fully open and exchange electronic information with third-party institutions such as virtual banks.

To comprehensively boost virtual banking services, the author recommends joint efforts from three levels. In terms of the market, in addition to basic banking transaction services, the authorities can cooperate with the industry to fully consider risk concentration and business balance issues, establish a "virtual asset bank" targeting the industry's pain points, and further provide comprehensive virtual financial services and facilities, including for Provide virtual currency trading and exchange services to individual customers, provide unified virtual asset clearing and settlement and custody services to qualified virtual asset service providers, lower the market entry threshold for small and medium-sized investors; and assist and encourage the industry to provide relevant insurance and funds , asset management and other "mid-income businesses", provide more innovative virtual financial products and services, and comprehensively develop an ecosystem that combines traditional and virtual finance.

Currently, backed by the geographical advantages of the Mainland and the Greater Bay Area, as well as global changes in capital flow and the reconstruction of the virtual asset value chain, Hong Kong has brought new opportunities for the development of virtual assets. Hong Kong should strengthen cooperation and coordination with other Greater Bay Area cities to jointly create a cross-regional and cross-industry financial technology ecosystem and promote the diversified development of the entire regional financial industry.

In terms of supervision, the author believes that the authorities can further strengthen legislation, law enforcement and digital technology and network risk management, create a safe, stable and complete virtual currency and virtual asset ecosystem, and prevent the market from being used for "money laundering" ", tax evasion, "terrorist financing" and circumvention of economic sanctions, and financial disclosure and risk management must be strengthened to effectively safeguard the legitimate rights and interests of investors.

Web3 takes the lead in solving development problems and pain points

As for technology, Web3 is essentially a technological revolution, which can continue to promote the innovation and application of financial technology development and take the lead in solving problems in finance, trade, and commercial operations. pain points and maintain Hong Kong’s position as the forefront of efficient international financial capital markets. The author suggests that under the concept of Web3, the authorities can promote various changes in financial technology in payment, lending, insurance, investment and other fields, inject innovative vitality into virtual asset policies, break through the traditional financial services framework, and enhance and consolidate Hong Kong's international reputation. The competitiveness of financial centers has brought unprecedented development opportunities to the industry.

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