2024 Web3.0 Industry Review: Compliance Process Accelerates, Hong Kong Leads Asian Innovation

As 2024 draws to a close, it's time to reflect on the development journey of the Web3.0 industry this year. Compliance has always been the main theme of China's Web3.0 development, from the advancement of the regulatory system for virtual asset service providers in Hong Kong, to mainland companies exploring RWA financing, and the cross-border application testing of the digital RMB, the interaction between policy and market continues to drive the standardization process of the industry.

Let us review the annual hot events and trends around the compliance keywords for 2024.

Hong Kong: The Rise of Asia's Web3.0 Innovation Hub

In 2024, Hong Kong's open policy in the Web3.0 field became the biggest highlight of the industry. The regulatory framework centered on the Virtual Asset Service Provider (VASP) license not only brought clear rules to the Chinese market but also attracted a surge of global capital and enterprises, gradually establishing Hong Kong's position as an Asian hub for crypto assets.

This year, multiple virtual asset trading platforms have been approved to officially open trading to retail investors in Hong Kong, marking the increasing maturity of the compliance system in the Hong Kong virtual asset market. Regulatory authorities have further clarified compliance boundaries, with regulatory details successively introduced for stablecoin issuers, custodial service providers, OTC, and other specific sectors to ensure market security and transparency.

These measures have significantly enhanced the credibility of Hong Kong's digital asset market, attracting a two-way influx of capital and enterprises. As of November, Hong Kong's Cyberport has gathered over 270 Web3.0 concept companies, with a cumulative financing scale exceeding 400 million HKD. The BTC spot ETF launched in the first half of this year has completed nearly 500 million USD in net inflow. Hong Kong is also actively hosting various Web3.0 events, attracting global industry participants, such as the Hong Kong FinTech Week held in October, which attracted over 500 exhibitors and tens of thousands of attendees.

Currently, Hong Kong is still undertaking multiple Web3.0 projects, including the Ensemble Sandbox Program, e-HKD+ Program, and more. At the same time, more virtual asset trading platforms are applying for or awaiting approval. As Asia's Web3 innovation hub, Hong Kong is gradually opening up a compliant virtual asset market through policy leadership and market-driven approaches. In the future, with the collaborative advancement of regulation and technology, Hong Kong is expected to continue leading in Web3 compliance innovation, providing a model and reference for other regions.

Mainland: Virtual Currency Regulation and Asset Protection in Parallel

In 2024, the judicial system in mainland China further clarifies its stance on the regulation and legal applicability of virtual currencies. Courts in various regions delineate legal boundaries for the circulation and use of virtual currencies based on the spirit of relevant documents, while gradually recognizing their economic value in property disputes.

In judicial practice, courts across various regions have generally emphasized that virtual currencies should not be used as financing, payment tools, or trading mediums. For example, the Shenzhen court ruled that paying wages with virtual currency is an invalid act; the Xiangyin court determined that using virtual currency to settle debts is invalid. These cases further solidify the positioning of virtual currency as "prohibited from circulation" within the mainland legal framework.

However, some case laws also show the judicial system's flexible handling of property rights protection. The Shanghai High People's Court explicitly recognized the property attributes of virtual currencies in a financing contract dispute case, stating that they can be legally protected as property rights. In addition, in multiple theft cases involving cryptocurrencies, judges qualified the acts as property theft rather than illegal acquisition of computer data, further reflecting the recognition of the property attributes of virtual currencies in judicial practice.

These cases not only provide clearer judicial basis for the legal application of virtual currencies but also emphasize their circulation restrictions and investment risks.

Blockchain Technology: Policy Support Accelerates Implementation

In stark contrast to the regulation of virtual currencies, mainland China maintains a positive attitude towards the support and promotion of blockchain technology and its related applications. At the CPPCC meeting in March 2024, the widespread application of blockchain technology was listed as a key topic for technological innovation. During the meeting, proposals were made to strengthen basic research on blockchain, enhance independent innovation capabilities, and support its widespread application in key areas such as finance, logistics, and energy.

Local governments have also successively introduced support policies. For example, the Hangzhou Municipal Bureau of Commerce has formulated an action plan to promote the development of a strong digital trade city, guiding the development of new business formats such as the Metaverse, digital twins, and digital collectibles; the Shandong Provincial Department of Industry and Information Technology has released an action plan for blockchain technology innovation and industrial development, integrating technologies such as blockchain, big data, and the Metaverse to assist in the development of new cultural and creative products like digital intangible cultural heritage, digital collectibles, and digital trendy toys.

The promotion of the digital renminbi (e-CNY) continues to accelerate, especially with breakthroughs in cross-border payments and wholesale settlements. The Shanghai municipal government has launched an implementation plan to realize high-level institutional openness in the free trade zone, proposing to orderly advance the pilot program for the digital renminbi and expand application scenarios. In addition, the pilot scope of the digital renminbi in Hong Kong and Macau has further expanded, and the scale of cross-border transactions is steadily increasing, becoming an important part of China's Web3.0 infrastructure.

Overall, in 2024, the policy support in mainland China surrounding blockchain technology and its applications not only promotes the construction of digital financial infrastructure but also provides a new compliance development path for the Web3.0 ecosystem. In the future, these innovative applications will continue to deepen, laying the foundation for the digital upgrade of the domestic market and enhancing international competitiveness.

RWA: A New Paradigm for Cross-Border Financing in Chinese Enterprises

In 2024, the tokenization of real-world assets (RWA) moves from concept to implementation, becoming one of the core trends in the Web3.0 industry. In this wave, Chinese companies begin to explore compliant cross-border financing models, providing a new solution for the integration of traditional assets and the digital economy.

In August, a blockchain platform jointly launched a new energy charging pile RWA project with a certain group, successfully completing a financing of 100 million RMB, opening up new compliance paths for the integration of traditional assets and the digital economy. In October, at the Hong Kong Fintech Week, the platform officially launched the RWA infrastructure "Two Chains and One Bridge" cross-border platform, focusing on the tokenization of traditional assets such as real estate, bills, and supply chain finance, promoting the standardization and compliance construction of asset cross-border circulation.

At the policy level, Hong Kong is taking the lead in exploring compliance pathways for RWA. Various initiatives, including the e-HKD pilot project and the Ensemble sandbox program, are gradually improving compliance standards in the RWA industry and providing security for cross-border transactions. In contrast, while mainland China has not yet introduced specific policies targeting RWA, it has laid the groundwork in blockchain technology and digital financial infrastructure development. Furthermore, Hong Kong's pioneering explorations in the RWA field have created conditions for mainland enterprises to participate in this trend through offshore markets.

With the continuous improvement of the regulatory framework and the expansion of cross-border application scenarios, RWA may become an important tool for digital financing and global asset allocation for Chinese enterprises in the future.

Crypto Going Global: Exploring New Paths for Compliance Participation

In 2024, under the rapid development of the global Web3.0 industry, Chinese enterprises are gradually turning their attention to Hong Kong and even overseas markets in the face of a strict regulatory environment at home, exploring new paths for compliance participation. Hong Kong's open policies, mature regulatory system, and shared cultural background have become the most attractive choices. Meanwhile, regions like Malta in Europe, Thailand in Asia, and the UAE in the Middle East have also become important options for Chinese enterprises to layout Web3.0 due to their flexible financial policies and open digital economy environments.

Going overseas does not mean evading regulation; instead, it requires companies to pay more attention to Compliance requirements. From building legal structures to cross-border capital flows, it is essential to ensure that global operations are conducted within a legal framework. For example, flexibly using offshore funds, digital asset custody platforms, and other tools within the permissible range of policies to gradually explore feasible pathways to participate in the digital economy.

Summary

In 2024, the Chinese Web3.0 industry is gradually showing a trend towards Compliance amid policy adjustments and market innovations. From the leading role of the Hong Kong VASP licensing system, to the trial of RWA cross-border asset management platforms, and the expansion of boundaries for crypto going abroad, these keywords not only outline the contours of China's Web3.0 Compliance development but also provide a reference for the further evolution of future policies.

For enterprises, compliance is the fundamental prerequisite for embracing the Web3.0 market, while cross-border layout, technological innovation, and policy communication are the key breakthroughs. Against the backdrop of accelerated global competition, how to flexibly layout within the compliance framework and seize market opportunities will become a core issue that Chinese enterprises must address.