On October 31, the Financial Secretary (Financial Services and the Treasury Bureau) of Hong Kong officially issued the Policy Declaration on the Development of Virtual Assets in Hong Kong (hereinafter referred to as the “Declaration”), which clarified the Hong Kong government’s policy stance, regulatory guidelines and pilot plans on the development of the booming virtual asset industry and ecosystem in Hong Kong, which undoubtedly gave practitioners great confidence and encouragement to develop Web3 in Hong Kong.
However, some people believe that the Declaration is still a conservative and cautious new policy in Hong Kong, although it has a strong value of innovation and openness, which has opened a crack for the door closed by Web3 before, but it is still more tentative than open.
For example, the term “virtual asset” is used in the Declaration instead of virtual currency, although the definition is not accurately expressed, but the meaning of virtual asset should be different from or greater than virtual currency. In addition, there are expressions that adopt “DLT” (distributed ledger technology) instead of “decentralized”, which represents still being technology-oriented rather than an idea.
Earlier, Hong Kong has successfully given birth to BitMEX, FTX, Crypto . COM and many other leading institutions in the crypto industry. At that time, BitMEX even leased the 45th floor of the Yangtze River Group Center, replacing the original Barclays Capital and announcing the acquisition of New World. And in both 18-19 years, Asia’s top crypto summit, Asia Crypto Week, was held in Hong Kong, once again emphasizing Hong Kong’s position in the crypto space.
But later, BitMEX, Crypto . Com has chosen Singapore as its base and FTX left the Bahamas last year. Today, there are very few well-known crypto companies that remain in Hong Kong. So what is the current status of Web3 development in Hong Kong, and what Web3 companies are worth paying attention to?
Global Fast Track 2022
The Global Fast Track is a global fast track organized by InvestHK, bringing together innovative fintech companies from around the world. These companies already have business clients in their home markets and beyond, and can connect with regional businesses and investors with their business solutions. The Global Fast Track will help these companies achieve more viability, visibility and scalability in Hong Kong, Asia and beyond.
BlockBeats counted 118 outstanding innovative fintech companies in Global Fast Track 2022 to manage the current Web3 development status of Hong Kong, and found that there are indeed not many Web3 projects born in Hong Kong (or headquartered in Hong Kong), mainly the following 8, accounting for only 6.8%.
HashKey Group is an end-to-end digital asset financial services group in Asia, headquartered in Hong Kong with operations in Singapore and Tokyo, providing new investment opportunities and solutions to institutions, family offices, funds and professional investors in the digital asset and blockchain ecosystem.
Everest Ventures Group
Everest Ventures Group, or EVG for short, is a blockchain investment bank and incubator spun off from Hong Kong-based private equity/venture capital fund Huiyou Capital, with a founding team that has managed nearly US$1 billion in assets and a number of Hong Kong and Korean listed companies. EVG’s portfolio includes Animoca Brands, The Sandbox, Flow Chain, Kraken and many other well-known projects.
Token Bay Capital
Token Bay Capital is an early-stage venture capital fund in Hong Kong that accepts funds from professional investors, providing diversified investment in the portfolio of digital assets and blockchain-related companies. Previously, Token Bay Capital participated in Yuga Labs, the parent company of NFT project BAYC.
Aspen Digital is a Hong Kong-based virtual asset management platform designed to provide individual or institutional users with the technology and expertise to build and manage digital asset strategies and access the best and most unique products in the crypto industry, with investments from Everest Ventures Group and Token Bay Capital.
Cell Rising Capital
Cell Rising Capital is an early-stage venture capital fund in Hong Kong that invests in businesses that aim to change the way traditional industries work and become pioneers of the future, helping these startups grow and thrive rapidly. Previously, Cell Rising Capital invested in Animoca Brands.
UVECON is a Hong Kong-based venture capital studio, accelerator and consulting firm that invests in fintech, blockchain, SaaS, and e-commerce.
ParticleX is also an accelerator in Hong Kong that aims to accelerate the growth of tech startups focusing on blockchain, big data, artificial intelligence (AI), Internet of Things (IoT), robotics, and more.
Global Digital MOJO
Global Digital MOJO (formerly known as Asia Digital MOJO) is an international digital strategy and production agency established in Hong Kong in 2009 with 6 studios around the world to provide digital transformation services and create AI Metaverse products for professionals.
It can be seen that in just two years, Hong Kong seems to have fallen from the altar of the former Asian crypto center, brain drain, project migration, ecological loss, and these are being injected into Singapore.
Indeed, Singapore’s Web3 enterprises are gradually increasing, especially after this year’s Token2049 was held locally, many Chinese began to have a simple intuition that Web3 entrepreneurship is going to Singapore. However, from other perspectives, Newport’s conclusion about the Asian crypto center battle seems to have not yet been settled, although Singapore has become an important Web3 development base in Asia, but not all projects are suitable for Singapore.
For example, Singapore’s Monetary Authority MAS has made it clear that it will take a fairly tough stance against the unfettered retail public, as retail investors should not dabble in cryptocurrencies. In Hong Kong, the regulator is considering allowing retail investors to invest directly in crypto assets, and the SFC will launch a public consultation on the appropriate extent to which retail investors can trade virtual assets under the new licensing regime.
Therefore, the choice of which regional entrepreneurship to land is a very complex issue, which must be comprehensively judged based on multiple factors such as the commercial nature of the specific project, compliance risks, team background, industry resources and product characteristics.
Then, for entrepreneurs with Chinese backgrounds, Hong Kong’s more open Web3 market, gradually stable regulatory system, perfect infrastructure and free flow of capital and information may still be able to help Hong Kong replace Singapore as the best choice for Chinese Web3 entrepreneurship in the future.
The release of the Hong Kong Declaration also makes Web3 various tracks such as virtual asset trading, NFT, Metaverse, GameFi, and crypto fund projects have an additional option for future business division, financing structure, team distribution and other issues.
Virtual asset trading and management
In general, there are currently three main regulatory authorities for virtual assets (cryptocurrencies, etc.) and trading in Hong Kong: the Securities and Futures Commission of Hong Kong (SFC), the Financial Services and the Treasury Bureau (FST) and the Hong Kong Monetary Authority(HKMA).
Among them, with SFC as the main regulatory force, SFC’s regulatory objectives include: maintaining and promoting fairness, efficiency, competitiveness, transparency and order in the securities and futures industry; minimise criminal acts and misconduct in the securities and futures industry; Reducing systemic risk in the securities and futures industry, etc.
In Hong Kong, cryptocurrencies are mainly divided into security cryptocurrencies, NFTs and virtual goods (such as Bitcoin), and different regulatory policies are adopted for different types of cryptocurrencies. The SFC’s interpretation of security cryptocurrencies is divided into the following three categories:
– Representation of equity (right to receive dividends and the right to participate in the distribution of residual assets in the event of the winding-up of the company);
– Represent claims (the issuer can repay the principal amount invested and pay interest to token holders on a specified date or upon redemption);
– Can be used to obtain income from “collective investment schemes”.
In addition, the FST and HKMA complement supervision from different regulatory perspectives. As the second main regulatory force, the Treasury Bureau mainly combats virtual asset laundering and terrorist financing.The HKMA is responsible for Hong Kong’s financial policy, banking and currency management, and plays a role similar to that of a central bank.
As mentioned in the Hong Kong Declaration, while stepping up preparations for the new licensing regime for virtual asset service providers, it is also willing to contact the global virtual asset industry and invite relevant trading platforms to explore business opportunities in Hong Kong. So what corresponding licenses do you need to apply for to legally carry out crypto financial activities in Hong Kong, and what are the top players in the market at present?
The SFC provides for a total of 12 regulated activities, which require a license to be regulated. Among them, the licenses related to cryptocurrency-related trading platforms, funds and fund management platforms mainly include Type 1, Type 4, Type 7 and Type 9 regulatory licenses, while the companies that have obtained relevant licenses in the market mainly include OSL, HashKey, NH Asset.
OSL is a wholly-owned subsidiary of BC Technology Group, a Hong Kong-based digital asset listed company, and the first company to obtain a Type 1 and 7 regulatory license from the SFC.
OSL not only provides secure and frictionless digital asset trading in multiple currencies, but also includes services such as bulk brokerage services, digital asset storage custody, and complete digital asset trading solutions.
HashKey includes multiple business lines including HashKey Capital, HashKey Pro and HashKey Custody. Currently, HBL (Hash Blockchain Limited) has obtained Type 1 and 7 regulatory licenses, while HashKey Capital has obtained a Type 9 license.
NH Asset (Shinhuo Asset Management “Hong Kong” Limited), a wholly-owned subsidiary of Shinhuo Technology (formerly “Huobi Technology”), provides securities advisory and asset management services to professional investors, and has obtained Type 4 and Type 9 regulatory licenses, while Huobi Technology subsidiaries are applying for Type 1 and Type 7 licenses regulated by virtual asset trading platforms.
At present, NH Asset has released 4 asset management products for professional investors: New Fire Bitcoin Fund, New Fire Ether Fund, New Fire Multi-Strategy Virtual Asset Fund and Private Equity Fund.
In addition to the above 12 types of licenses issued by SFC, there are some digital asset trading platforms in Hong Kong that have obtained TCSP (Trust or Company Service Provider) licenses, such as HKD.com and Ouke Cloud Chain Trust, however, Ouke Cloud Chain has not yet started to provide trust or company services.
HKD.com (Hong Kong Digital Asset Exchange) is committed to the trading and popularization of digital currencies, founded in 2019 and has a Hong Kong TCSP license. In addition to a secure online digital currency trading platform, HKD.com has also set up a physical digital currency trading store with an area of nearly 10,000 square feet in Hong Kong’s core business district, committed to making digital currency physical and popular.
HKD.com physical stores
Tokenization of bonds (securities).
Bond tokenization will help improve the efficiency of bond issuance and settlement, reduce costs, and attract more investors to the market. In the Hong Kong “Declaration”, it is mentioned that Hong Kong will experiment with the issuance of tokenized green bonds, temporarily issuing a smaller scale, mainly for institutional investors to subscribe, aiming to issue within this year, hoping to become the world’s first tokenized government green bonds.
The Hong Kong Monetary Authority also said that it has completed Project Genesis with the Hong Kong Center of the Bank for International Settlements Innovation Hub (BISIH) and completed the proof of concept for issuing tokenized green bonds to retail investors in Hong Kong, and will further study the feasibility of issuing tokenized green bonds through the government green bond scheme in the future.
On July 26 this year, OSL has announced that it will distribute security tokens in a private securities token offering (STO) and will be the first digital asset broker to obtain SFC Type 1 registration and STO with professional investors. Participants in the offering also include Animoca Brands, Head and Shoulders Financial Group, China Fortune Financial Group Limited, Volmart and Monmonkey Group Asset Management Limited.
Knight Dragon, a property developer owned by Hong Kong billionaire Cheng Kar-shun, announced on June 21 this year that it would issue 100,000 security tokens “KDB4”, and holders will have the right to share 80% of the gross profits generated by Knight Dragon Building 4. Knight Dragon expects the KDB4 Token to be worth £140 million ($172 million), and the token offering date has not yet been confirmed.
Under the planning of the three regulatory authorities, Hong Kong’s virtual asset licensing regulatory system has gradually become clear. For the supervision of NFT in Hong Kong, a more detailed division has been made, NFT can be divided into two parts: gold financing NFT and collectible NFT.
For financial NFTs, their promotional transactions must be strictly regulated by the SFC and can only be carried out after obtaining a license. For collectible NFTs, their activities are not regulated by the SFC. It is worth mentioning that during the “Hong Kong FinTech Week 2022”, the organizer also issued a limited edition NFT with a certificate of attendance for attendees, allowing holders to create their own avatars through 3D scanning, and to participate in other industry events in the future.
At present, some NFT projects and related infrastructure with high attention have emerged in Hong Kong, among which well-known NFT projects mainly come from the cross-border integration of many Hong Kong stars, such as Edison Chan and Yu Wenle. But at present, the NFT prices of these projects have fallen by more than 80% at their high points, so the following is only an introduction to these projects, not as investment advice.
The Heart Project
The Heart Project NFTs are inspired by the love motifs in a limited-edition capsule collection created by Edison Chen and Los Angeles-based trend artist Stefan Meier for Emotionally Unavailable. The Heart Project NFTs totaled 10,000, of which 5,000 were pre-sold to community members as a whitelist at the time.
ZombieClub is an NFT project launched by Yu Wenle, with the concept of zombies and Frankenstein creations, the design contains 9 race characters, each race has different attributes, a total of 6666.
Artifact Labs is a multi-chain NFT ecosystem founded by the South China Morning Post to spin off its blockchain-based NFT business with the aim of turning art, photos, and content from Hong Kong’s 118-year-old English-language newspaper into tradable NFTs. Artifact Labs also helps turn the property of other organizations, including schools and museums, into digital collections.
Red Hare NFT
Red Salt, a Hong Kong-based NFT analytics and big data platform, launched Asia’s first NFT index in May 2022, and its products and services mainly include: NFT indexing and NFT analysis suite, NFT big data, Tech Stack service (NFT product accelerator and incubator), and NFT incubation service, among others.
Original Space / GameFi
The Metaverse is an immersive virtual space that provides users with rich consumption content and a fair creation platform where users can carry out cultural, social, entertainment and other activities. And in the past two years, multiple factors have promoted the Metaverse from concept to popularity, which not only brings development opportunities for the combination of gaming and social networking, but also retail, e-commerce and industrial Internet.
In Hong Kong, whether it is industry, education and research, the development of the Metaverse has also brought a series of breakthroughs. Among them, not only the Hong Kong University of Science and Technology announced the establishment of MetaHKUST, an extended reality campus in the Metaverse, to provide an immersive learning experience. There are also well-known companies such as Meta and Yahoo Hong Kong that will launch a series of plans in Hong Kong to support the development of the Metaverse. In addition, the leading project The Sandbox has established a prosperous Metaverse ecology.
The Sandbox is a blockchain-based 3D open-world Metaverse launched in November 2021 by Animoca Brands.
At present, many organizations in Hong Kong have built virtual worlds in The Sandbox. For example, MTR Corporation has reached a partnership to build a railway-centric virtual space in it; As well as Hong Kong-listed companies PCCW and Hong Kong Telecom also announced their cooperation with it, becoming the first Hong Kong CMT (Communication, Media & Technology) institutions to enter The Sandbox Metaverse. In addition, Hong Kong real estate giant and New World Development Group CEO Cheng Chi Kong announced a $5 million investment in it.
STEPN is a Web3 application that swept the encryption field this year, and it has attracted wide adoption by many users inside and outside the crypto community through the “Move to Earn” model. After being invited by George Lam, former chairman of Cyberport in Hong Kong, STEPN has now moved into Hong Kong and set up its first regional headquarters outside Australia.
In addition to the above-mentioned crypto funds such as EVG and Token Bay Capital mentioned in Global Fast Track 2022, there are currently some crypto VCs and funds worth paying attention to in Hong Kong.
Animoca Brands aims to drive digital property rights through NFTs and games to build an open Metaverse. Currently, Animoca Brands has more than 380 portfolios, including Colossal, Axie Infinity, OpenSea, Dapper Labs (NBA Top Shot), Yield Guild Games, Harmony, Alien Worlds, Star Atlas and more.
Animoca Brands is also a developer and publisher of games and other applications for smartphones and tablets, with original titles such as The Sandbox, Crazy Kings and Crazy Defense Heroes.
Kenetic Capital is a proprietary trading and venture capital firm in Hong Kong focused on digital asset and blockchain-related companies, with a portfolio of well-known crypto projects such as FTX, BlockFi, Alchemy, Polkadot, IoTeX, and many others.
Chiron is a Hong Kong-based venture capital firm that has launched a $50 million crypto fund, mainly investing in DeFi, as well as NFT projects related to the Metaverse, etc.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-are-the-web3-companies-to-watch-in-hong-kong/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.