CZ is really bold: criticized Hong Kong's Web3 policy thoroughly.

On August 27, at the "Hong Kong Encryption Finance Forum" held at the University of Hong Kong, CZ's speech was blunt and straightforward, criticizing Hong Kong's Web3 policies harshly.

This article presents and interprets the core viewpoints after removing polite measures:

01 About Stablecoins: All Those Who Manage Too Much Fail

The current U.S. government is very smart, leveraging its business background to deeply understand the strategic value of Tether to the global status of the U.S. dollar. Currently, about 100 billion USDT has been used to purchase U.S. Treasury bonds, and Tether is widely used globally.

The key point is that Americans themselves do not need stablecoins—they can use the bank ACH system for USD transactions directly. Almost all USDT users are outside the United States, which actually expands the global influence of the US dollar.

When the United States passed the GENIUS Act in July, it proposed a policy direction to limit the development of central bank digital currencies (CBDCs), reflecting a profound strategic layout regarding the global dominance of the US dollar.

The reason stablecoins are so popular is due to their high liquidity and good user experience, while some government-led digital currencies may be more stringent in terms of regulation and monitoring, which could negatively impact market acceptance.

In fact, since 2014, more than 20 countries have attempted to issue CBDCs, but none have truly achieved success at the market level.

----Personal Interpretation----

The issuance of stablecoins in Hong Kong has received a lot of attention, but in fact, Hong Kong is leading the issuance with strict regulation and monitoring, for example,

Stablecoin issuers must perform identity verification (KYC) on every holder, even users using anonymous or non-custodial wallets must complete verification to participate in transactions.

The authorities believe that, in the absence of other effective measures, "identity verification for each holder" is a necessary means to combat money laundering and terrorist financing.

02 About RWA: Too many licenses, assets are not good

Taking real estate as an example, even in the highly volatile Hong Kong real estate market, the fluctuations are still much smaller compared to Bitcoin. After the issuance of such low-volatility assets, the trading activity is weak due to the low volatility, resulting in insufficient order book depth. At this point, liquidity decreases, and investors will not place many orders, creating a vicious cycle: with a shallow order book, trading volume will decrease.

If investors attempt to enter and exit funds at the level of hundreds of millions, it is almost impossible to execute transactions; even if assets are on-chain, liquidity remains insufficient, which can instead lead to unexpected fluctuations and even be subject to short-term manipulation.

In some places, companies need to apply for different licenses: futures licenses, spot licenses, digital currency licenses, bank custody licenses, and so on. When a company holds a large number of licenses, its business model may also be more restricted, and many times, it may not be able to run even one business.

Directly slap Hong Kong,

Moreover, most RWA products (especially real estate, funds, and bond tokenization) developed in Hong Kong are considered "securities" or "Collective Investment Schemes (CIS)" by the Hong Kong Securities and Futures Commission. The licenses involved mainly include:

Category 1 License: Securities Trading

If your platform facilitates the buying and selling of RWA tokens → it is necessary.

License Category 4: Providing advice on securities

If your business involves recommending and designing RWA investment solutions for clients → needed.

Category 6 License: Provide advice on institutional financing

If it involves the issuance of RWA projects and tokenized financing (such as real estate token issuance) → it is needed.

Category 7 License: Automated Trading Services (ATS)

If you operate a secondary market platform (such as an STO exchange) → you must apply.

Category 9 License: Asset Management

If establishing a Tokenized Fund → requires wealth management for clients.

03 About Exchanges: Don't Create Independent Kingdoms!

Many countries or regions often choose strict controls to reduce risks and ensure safety during the early stages of regulation in the encryption industry.

Regulatory authorities are concerned about making mistakes, so they usually require all operations to be conducted locally: local licenses, local offices, local staff, local compliance departments, local servers, local data storage, local matching engines, local user bases, and completely independent local wallet infrastructure from abroad.

This idea is relatively easy to implement in the traditional physical world, such as controlling it through safes and physical barriers. However, in the digital currency industry, this distinction is not very significant. Regardless of whether the servers are located in Hong Kong, Singapore, or the United States, the chances of being hacked are the same because everything runs online.

Moreover, if you want to split operations, simply building a secure wallet infrastructure often requires an investment of around one billion dollars. And the problem is not just about funding; it also lies in the shortage of talent—it's very challenging to repeatedly recruit hundreds of top global security experts to establish this foundational system. The cost of replicating a complete system is essentially equivalent to the cost of establishing a top-tier international exchange.

From a liquidity perspective, if only local residents are allowed to trade, taking Hong Kong as an example, with a population of 8 million, or other small countries with an active user base of 200,000 to 300,000, it is simply not enough to generate sufficient trading volume. Without liquidity, price fluctuations will be very severe, which is actually harmful to users.

According to my understanding, most licensed exchanges in Hong Kong are currently operating at a loss. Although they can maintain this in the short term, this loss model is difficult to sustain in the long run.

For those who require local basic settings, Hong Kong is almost unique in the world, referencing a complete turnaround! Hong Kong has started to restrict hardware wallets!

Regarding the plight of exchanges, can we refer to this and say that the VATP license in Hong Kong will become a joke?

04 About the Future: Hong Kong Needs to Change Quickly!

Hong Kong may have been relatively conservative in previous years, which is completely understandable. With the changes in the global situation, Hong Kong is now behaving very proactively.

If U.S. stocks can also be smoothly linked to the blockchain, it will further consolidate the United States' dominant position in the global financial market.

Other countries that do not participate in this transformation may also face the risk of being marginalized.

For example, if the Hong Kong Stock Exchange, as an important exchange with global influence, is absent in this round of transformation, its influence may gradually weaken. Other Asian exchanges, such as the Shanghai Stock Exchange, also face the same strategic choice.

This doesn't need my interpretation, what CZ said is very straightforward~