Initiating New Web3 and Digital Yuan Programs in Hong Kong in 2022

Hong Kong has unveiled its ambitious plans for the future of its digital economy in its 2024-2025 budget. Financial Secretary Paul Chan announced the city’s intention to launch a Web3 sandbox for stablecoins and expand the digital yuan pilot as part of its digital finance policies.

The city’s focus on accelerating the promotion of its digital economy was emphasized in Chan’s speech, where he outlined new actions and policies to be implemented. One of the key initiatives mentioned was the extension of the e-HKD, Hong Kong’s central bank digital currency (CBDC), to explore new use cases beyond programmable payments, offline payments, and tokenized deposits that were studied in the initial phase. Additionally, the digital yuan pilot in Hong Kong will be expanded, with citizens being able to create digital yuan wallets funded by the Faster Payment System (FPS) to enhance cross-boundary payment services.

In a move to foster innovation while maintaining financial stability, Hong Kong will also launch a sandbox for institutions to experiment with issuing stablecoins. This sandbox will allow participants to test the issuance process, business models, investor protection, and risk management systems of stablecoins, providing valuable insights for future regulation of these assets.

Furthermore, the city is looking to strengthen oversight of cryptocurrency over-the-counter (OTC) markets, particularly in light of mainland Chinese investors using these platforms to access cryptocurrency assets. Overall, Hong Kong’s Web3 and digital yuan initiatives aim to propel the city’s digital economy forward and enhance its position as a key player in the global financial landscape. Let us know your thoughts on these initiatives in the comments section below.