5 October 2023
Statement by Hong Kong Web3 industry leaders in response to JPEX incident
We represent various organizations committed to developing Hong Kong’s Web3 ecosystem, and we have taken notice of the situation at JPEX. We continue to believe that Web3, enabled by digital asset ownership, has the potential to change the world for the better, just as the previous generations of the Internet and social media driven by Web1 and Web2 have already brought countless positive changes to our lives.
We strongly believe that the Government of the Hong Kong Special Administrative Region has taken the correct approach in its commitment to the future growth of Web3, including the development of clear and consistent regulation to govern the digital assets economy. This commitment has already led to a new licensing regime for virtual asset exchanges, the tokenization of real-world assets such as green bonds, several eHKD pilots, and deep collaboration and consultation with industry builders. Hong Kong has boldly stepped into regulatory leadership over the course of the past year, and as Asia’s most credible financial center and a global cultural hub, we believe that Hong Kong can become a strong foundation for a global digital economy.
We, alongside many builders and leaders in the Hong Kong Web3 community, remain committed to the ethical development of decentralized technologies and their applications, underpinned by informed regulations, transparent industry self-governance, and public education. As is the case in most innovations, including the early days of the Internet, there are risks and bad actors, and all interested parties should focus on the long term good that Web3 can deliver while taking all possible actions to mitigate the associated risks. Risk mitigation can be achieved through the collaborative development of rules and standards that restrict bad actors without stifling innovation.
Against the backdrop of recent enforcement actions against JPEX, we wish to express our unambiguous support for:
Strict and swift enforcement – in particular, against virtual asset service providers that contravene Hong Kong’s licensing requirements, engage in criminal acts, or harm investors with fraudulent, deceptive or misleading behavior;
Enhanced efforts to educate the investing public – in particular, about Hong Kong’s regulatory regime for digital assets and their safekeeping, the controls and operations required of licensed firms, and ‘red flags’ for potential scams or fraudulent activities. The increased transparency by the SFC in disclosing its virtual assets applicants list is a positive step in providing relevant information to the public. We recommend that the Government work with the Web3 industry to educate the public by providing realistic examples of blockchain scams and fraudulent schemes, similarly to the existing measures in place to educate the public about telephone frauds.
In summary, we believe that Web3 is a net positive force for the Internet, and that Hong Kong has strong potential to become a global innovation hub and leader in the digital asset economy. We recognize that most innovations come with risks, and that thoughtful regulation, transparent discourse, and public education are the best forms of mitigation of those risks. We, the undersigned, stand ready to provide our assistance and counsel on this and similar matters.
Yat Siu, Executive Chairman and Co-Founder
Evan Auyang, Group President
Gary Liu, Founding Chair
Gary Tiu, Executive Director and Head of Regulatory Affairs
Angelina Kwan, CEO
Cynthia Wu, COO
Lawrence Chu, Chairman
Sean Lee, Senior Advisor
Crypto Council for Innovation
Karena Belin, CEO and Co-Founder
Jack Kong, CEO