I. Hong Kong Needs a Fresh Start in Cryptocurrency
During the Bitcoin Asia Conference starting on August 27th, Changpeng Zhao (CZ) shared his expectations for Hong Kong’s regulation, speaking very practically. It is commendable that CZ can freely enter and exit Hong Kong, which somewhat reflects the goodwill of the Hong Kong government. This might be a signal of change in Hong Kong’s approach to the crypto field.
Hong Kong was once a significant birthplace for cryptocurrency applications. Many famous crypto companies started here; for example, USDT was born in Hong Kong. The formerly world’s second-largest exchange, FTX, also started in Hong Kong. Numerous Chinese practitioners began their exploration of cryptocurrency here. In the early days, Chinese were the absolute leaders in the crypto field. International peers even needed to learn Chinese, including Ethereum founder Vitalik Buterin. Later, most Chinese entrepreneurs left their homes to start businesses abroad again. Under difficult conditions, Chinese have performed outstandingly. The founders of the top three centralized exchanges by spot daily trading volume are all Chinese. Among the top ten exchanges, the vast majority are also founded by Chinese. The number one decentralized exchange is still Chinese-run. At its peak, China controlled 70% of Bitcoin’s hashrate, but today it has almost none. It’s not that Chinese aren’t hardworking; one can only blame unfortunate circumstances. But Chinese still dominate the chip and miner manufacturing industry. In just 8 years, CZ’s net worth is conservatively estimated at $50.7 billion, making him the richest Chinese person. How many other invisible wealthy individuals there are is unknown, but conservative estimates based on various data suggest that Chinese control over $2 trillion in cryptocurrency wealth! This is a huge resource.
CZ said: “When I left the mainland four years ago, I thought I would never return to the core stage of the Chinese-speaking world. But standing in Hong Kong today, I clearly know that the previous wandering was just a prelude; the real story is just beginning.” These words not only voice the sentiments of many overseas crypto practitioners but also express anticipation for Hong Kong to embrace innovation once again.
To attract leading figures like CZ to truly return, Hong Kong must make substantive changes in policy philosophy and regulatory practice.
II. Core Problems with Current Regulatory Laws
After the Hong Kong exchange licensing regime was introduced, famous exchanges withdrew their applications. This reflects a disconnect between regulatory design and market reality.
The stablecoin bill learned from USDT. And USDT itself drew lessons from the Hong Kong dollar’s linked exchange rate system for its issuance. For reference, see my article “Hong Kong Dollar Stablecoin Issuance: On-Chain Reconstruction Based on the Linked Exchange Rate System and the Essential Difference from CBDC”.
These two issues indicate that regulators still lack sufficient understanding of the market and cryptocurrency. CZ hinted: If Hong Kong continues with closed-door regulation, restricts asset types, and ignores global liquidity, it will be difficult to truly build a world-class digital asset center.
Meanwhile, US regulation has changed leadership. Paul S. Atkins is now the Chairman of the U.S. Securities and Exchange Commission (SEC). He is an American businessman, lawyer, and lobbyist, and also co-chair of the Token Alliance.
Atkins positions the SEC as the “global standard-setter for crypto.” He publicly criticized his predecessor’s “regulation by enforcement” model as “horse-and-buggy regulation for the digital age.” This phrase also applies to Hong Kong’s current regulatory situation.
Atkins’ most impactful prediction is perhaps the “Cambrian explosion of innovation,” suggesting that if the US adheres to directions like crypto and tokenization, it might usher in a wave of innovation akin to a biological explosion. Although he is not a frontline crypto practitioner, his attitude of open regulation and encouraging innovation is worth Hong Kong learning from.
CZ similarly hinted that this is a matter of timing. If Hong Kong misses this opportunity, it might not get another chance.
III. Building a Truly Practical Regulatory System
1. Establish a Unified Cross-Departmental Regulatory Agency
Cryptocurrency is a global competition and is not suitable for regulation using a mindset designed for regional products. Poor regulation drives away companies and participants. Cryptocurrency possesses characteristics of securities, currency, and commodities, making it unsuitable for regulation by any single separate department. Improving regulation is definitely the most critical issue.
CZ believes: “Hong Kong could establish a cross-departmental working group to unify approval standards and reduce the complexity of corporate compliance.” I discussed in detail how cryptocurrency should be regulated in my series “Problems with Cryptocurrency Regulation 1-4”. Our views align, though mine are more detailed.
The operation of cryptocurrency regulatory agencies must be open and transparent. The current regulatory consultation mechanism is far behind the needs of the times. Regulatory agencies need to maintain communication with the community and people from all walks of life to align with the operational logic of cryptocurrency.
2. Establish a “Government-Public Collaboration, Professionally Led” Decision-Making Advisory Body
Most importantly, establish a decision-making advisory body integrating government and the public, allowing experts with first-line experience to truly have a voice. For all regulatory amendments and detailed rule formulation, it is suggested that official decision-makers’ voting power should not exceed 50%.
Private individuals should be selected based on merit. Reference conditions include:
1) Having developed world-renowned projects;
2) Having theoretical contributions to the industry;
3) Having made significant contributions to the industry;
4) Having projects landed in Hong Kong or committed to landing in Hong Kong when conditions permit, having personally participated in cryptocurrency practice, and holding cryptocurrencies worth more than $5 million. The fourth condition is a basic requirement.
3. The Principle of “Market First, Appropriate Regulation”
Hong Kong has a tradition of market mechanisms and relatively relaxed regulation. Facing new things, practice should precede restriction. The core idea is not to make decisions for users. Exchanges should have the power to list coins, introducing the current stock market’s sponsor, analyst, and broker system into cryptocurrency. Let market mechanisms play a role. Regulatory resources should focus on systemic risk prevention and major violation handling, rather than excessive preemptive intervention.
The market is smarter than us. Allow for experimentation, learn from mistakes, and adopt a principle of non-intervention unless complaints are raised.
4. Comprehensively Promote Exchange Operational Transparency
If centralized exchanges’ ledgers are transparent, regulation would be greatly simplified. This is the future direction of regulation. Although the user experience of decentralized exchanges (DEX) needs improvement, their transparent nature is highly favored by users. By developing on-chain tracking tools, trading behavior can be monitored in real-time. If DEX adopts a whitelist mechanism (completed KYC verification), it could effectively curb bot cheating, which is currently a major shortcoming of DEX.
Transparency requires the help of the community, with users supervising exchanges. The cryptocurrency community is a core component of the token ecosystem. Currently, no community tool is specifically developed for cryptocurrency. We designed the Simitalk universal community, making “one coin, one community” possible. Communities and token apps can be seamlessly connected. Issuers have control over the community.
The stock regulatory model should not be applied to cryptocurrency, as there are essential differences in transparency. Regulating based on transparency is the principle for cryptocurrency regulation.
Hong Kong’s stock trading can be transparent down to the broker level. Future stock trading should also be transparent down to individual accounts though individuals could choose to make information public or remain anonymous to protect privacy.
Why not use Web3 ideas to reform Web2? Exchange operational transparency is not only needed for cryptocurrency but is the evolutionary direction for all exchanges. In the future, transparent exchanges will inevitably defeat opaque ones. Once policies are liberalized, a “Cambrian explosion of innovation” will occur.
IV. How to Make Hong Kong a Cryptocurrency Hub
This is a systematic project with a limited window of opportunity. Hong Kong needs to leverage its advantages, focusing on three strategic directions: stablecoins, exchanges, and distinctive assets.
1. The HKMA Leads the Issuance of a USD Stablecoin USHK to Compete Directly with USDT
USDT is generally used in non-US markets. USDT’s fiat reserves are opaque, it has a $100,000 redemption threshold, and a 0.1% fee. If the method I proposed in my article “Hong Kong Dollar Stablecoin Issuance: On-Chain Reconstruction Based on the Linked Exchange Rate System and the Essential Difference from CBDC” is adopted—where the HKMA issues a USD stablecoin using the linked exchange rate mechanism, banks hand USD to the HKMA, and the HKMA issues the USD stablecoin USHK (or USDK) to banks—the aforementioned three problems could be solved, creating a comprehensive advantage over USDT.
Currently, banks exchange USD without fees or thresholds, and the HKMA’s credit is far higher than USDT’s. This embodies the institutional and managerial advantages Hong Kong has built over 40 years. Hong Kong’s three major banks have complete KYC, AML, and CFT measures, and as issuers of Hong Kong dollars, they have operational systems and experience. According to my descriptions in “Will the Stablecoin Bill Trigger a Financial Tsunami?” and “When Stablecoins Tear Down Banks’ Interest Rate Spread Moat“, banks can gain new profit models through this.
Mainland Chinese residents have a $50,000 foreign exchange quota per person. If banks allow clients to exchange not only for USD but also for the USD stablecoin USHK, then USHK could quickly become an offshore settlement currency for USD stablecoins, rapidly surpassing USDT to become “Hong Kong Dollar” (referring to a Hong Kong-issued USD stablecoin), following Petrodollars and Eurodollars.
2. Modify Policies to Attract Global Top Exchanges
The biggest applications in cryptocurrency’s 15-year history are: stablecoins and exchanges. The two complement each other. Having several top established in Hong Kong would be a major breakthrough. Mastering these two areas will drive traffic and ecological aggregation, promoting the tokenization of financial assets.
Since USDC mainly circulates in the US, the quantities of USDT and USDC indicate that the US market share is less than 30%, leaving vast potential in the global market. Attracting global top exchanges requires providing a clear, safe, and stable policy environment and adopting a pragmatic attitude of not investigating past issues.
3. Develop New Large-Scale Applications——Antique Assets
CZ believes RWA (Real World Assets) lacks sufficient traffic and financial products are a clear direction. The US market is the largest; can Hong Kong outperform the US? RWA is in the exploratory stage, but which major cryptocurrency today wasn’t an early explorer? For Hong Kong to succeed, it must cultivate its own unique advantages. There are difficulties early on, but also benefits.
Antiques are a natural advantage for ancient civilizations. They are the commodity most similar to Bitcoin. Using reasonable issuance methods can ensure profits for early investors. My article “The Financial Logic of Establishing an On-Chain Antiques Market” will be published simultaneously with the issuance of the antique coin. We will use DEX and innovative algorithms to provide new ideas for the future issuance of fine antiques.
Antiques are also the asset class most easily put on-chain. However, the antiques market has never achieved scale. The reasons are rampant speculation and counterfeiting, and a lack of credit. The entire ecosystem is imperfect. Furthermore, there are no recognized appraisal institutions, and famous auction houses like Christie’s state on their invoices that they do not guarantee authenticity—so what is the meaning of “orderly inheritance”? What we call “orderlyinheritance” often relies on the auction house’s brand, which does not guarantee the antique’s authenticity.
Antique prices are not as true as cryptocurrency and stock prices. The reason is that stocks and cryptocurrencies are part of a whole and can be fully traded. Auctions involve the sale of the whole item, and market auctions inevitably involve “shill bidding,” not being products of fully market-driven trading. The adoption of cryptocurrency will overturn the traditional auction model for antiques, giving rise to fairer trading methods.
Nowadays, the means of detection are actually quite available, especially for determining the age of various antiques with relative accuracy. There are various methods for determining the age of antiques among the folk, but none of them are officially recognized. If officially recognized one day, the domestic cultural relics system might face major adjustments. The ratio of genuine to fake among existing antiques with “orderly inheritance” is also unknown.
My partner has a bronze vessel, the “Nine Tripod.” Bronze vessels can be dated using the crystals formed by patina (verdigris), observable under a 1000x electron microscope. However, no research institution in Hong Kong is willing to accept commercial appraisal, and even obtaining a crystal report is impossible.
In mainland China, entangled interests complicate what should be a simple matter of appraisal and certification. Hong Kong has no historical baggage, making it possible to develop an appraisal ecosystem and achieve world-class authority. Establishing industry standards is also possible. This requires collaboration between the government and the public.
According to industry estimates, the value of antiques currently existing in Hong Kong is conservatively estimated at over HKD 500 billion. Activating the private collection market is not only beneficial for Hong Kong but also a new growth point for the Chinese economy. Leveraging the trading characteristics of cryptocurrency can help correctly price antiques. Turning a niche market into a mass market is the path cryptocurrency itself took. Whoever leads in creating new markets will gain the advantage.
Leveraging its advantages in the rule of law and certification, Hong Kong can support antique appraisal and certification institutions, establish global authority in antique authentication and insurance, and hold global discourse power.
Relying solely on the competitive advantages of stablecoins and exchanges, Hong Kong’s hope of becoming a cryptocurrency hub is challenging. If the third point is successfully achieved, Hong Kong could become a global cryptocurrency center.
4. Special Policies to Attract Crypto Talent
1) Donate HKD 3 Million Worth of Bitcoin or Ethereum
There are over 990,000 on-chain accounts holding at least 1 Bitcoin. To prevent loopholes, rules could require holding at least 1 Bitcoin for over 1 year for the donation to be valid. The above measures could attract 150,000 to 250,000 industry elites to Hong Kong. Donors must reside in Hong Kong for at least 3 months per year for 7 years. Accumulating 21 months of residence could qualify for a passport.
2) Crypto Projects Hiring Foreigners Need to Stake Bitcoin or Ethereum
For each foreigner hired, stake 1 Bitcoin or equivalent Ethereum to absorb excellent programmers who may not meet current immigration conditions into project development. Developers must reside in Hong Kong for at least 3 months per year for 7 years and pay taxes in Hong Kong.
The donation amount might seem small, but as strategic reserves for Hong Kong, it might be more effective than the HKD 30 million investment immigration policy.
The above policies address market pain points. Once launched, they will inevitably attract strong international attention.
The following section may seem unrelated but is actually important for the future integration of Web3 and traditional finance. Limited by space, it cannot be fully expanded upon.
V. Forward-Thinking: Integration and Innovation of Financial Architecture
1. How to Combine Banks’ Advantages with Cryptocurrency
Banks have the following five advantages:
1) Banks are easily compliant. Regarding KYC, AML, and CFT identification, cryptocurrency currently cannot replace them.
2) Conversion between fiat and cryptocurrency is currently irreplaceable.
3) They are the best issuers of stablecoins, currently difficult to replace.
4) Resistance to attacks. We rarely hear about banks being hacked. Even large cryptocurrency projects are often hacked.
5) Credit. Long-accumulated credit.
Banks have the following five disadvantages:
1) Lack of transparency
2) Ability to use user assets
3) Low transfer efficiency
4) High management costs
5) The risk of bank failure is far greater than that of mature cryptocurrency projects
Because blockchain technology is mature, if banks introduce blockchain ledgers and cryptocurrency transparency mechanisms, the first four problems (lack of transparency, using user assets, low efficiency, high costs) can be solved. Therefore, some say the speed at which banks enter Web3 might be faster than Web3 replacing traditional finance. But the fifth problem (bank failure risk) cannot be solved by blockchain.
2. How to Make Cryptocurrency Projects Achieve Banks’ Attack Resistance?
According to a Kimo News report, the value of cryptocurrency stolen by hackers in the first half of 2025 has reached $2.17 billion. Banks rarely report such incidents. Cryptocurrency gains trust through openness and transparency. Ledgers are public, code is public, even programmers are public. Banks accumulate credit over time under regulation. They do not publish code or publicize transaction ledgers like blockchain.
We demand that banks publish transaction ledgers, so this is a consistent requirement for both banks and cryptocurrency. Whether programmers are public: the Bitcoin system now publishes maintainers’ names; from a security perspective, it might be optional. Code publicity is a source of trust but also provides opportunities for hackers. Because technology constantly advances and AI capabilities continually improve, no one can guarantee code is free of vulnerabilities. No bank would dare adopt such uncertainty. They prefer consortium chains over public chains, clearly indicating that full code publicity has issues.
A compromise is not to publish the code for cross-chain transfers and multi-signature private keys, having that portion audited by independent third parties. This way, 98%–99% of the code is public. By not publishing the critical code and combining it with bank-grade server cloud protection (Level 3+), bank-level security can be achieved. This shift in thinking is crucial; otherwise, cryptocurrency security is not guaranteed.
The approach of full code publicity requires that the code cannot be easily changed and needs to run on a testnet for a long time.
3. The Chainless Finance Platform is the Practice of This Design Philosophy
The Chainless Finance Platform combines the advantages of Web2 and Web3, integrating the strengths of banks and blockchain. The underlying layer uses the blockchain Near, while the application layer is Web2. The Chainless Finance Platform consists of three main modules: the Chainless Mini Program Platform, the Multi-Sig Multi-Backup Wallet, and the Universal Cryptocurrency Community Software Simi. These three parts organically combine to form innovative application products.
1) Chainless Mini Program Platform
The Chainless Platform is based on a redefined Web3 concept (for clicking, pushing + owning). This definition inherits the advantages of Web1 and Web2, opening up new possibilities. The Chainless Platform achieves Web2’s personalized experience —thousand people, thousand faces and integrates with mini-programs, with all applications presented as mini-programs. It maintains the spirit of Web3; this is inheritance-style development, a reasonable path for internet evolution.
The mini-program concept includes smart contracts. User experience is similar to WeChat mini-programs.
Standard features:
(1） Exchange Mini-Program: Supports global exchanges.
(2） Payment Mini-Program: No need to send funds to the payment mini-program provider.
(3） Airdrop Mini-Program: Receive airdrops without fees.
(4) RWA Issuance Mini-Program: Compliant issuance and supervision process.
We have a slogan: Money never leaves the wallet, connecting infinite transactions and payments. This means connecting to limitless exchanges and payment tools without the risk of funds being misappropriated. It shares customers with exchanges and payment tools.
The Chainless Platform uses novel cross-chain technology. Asset transfers are initiated by the user; the platform only plays a verification role. The platform and the user have a parallel multi-signature relationship; without the user’s initiation, the system cannot complete the multi-signature alone. That is, the platform cannot touch user assets alone.
The general ledger is transparent; transaction ledgers are on-chain. Anyone can download the ledger for supervision and verification.
Transfer parties reconcile accounts, ensuring no errors.
Supports anonymous and real-name operations.
2) Multi-Signature Multi-Backup Wallet
Private keys are invisible. The underlying layer is blockchain; the upper layer is Web2, offering strong usability.
Multi-signature settings can be tiered based on transfer amount size. Only the main device (main phone) has the power to set the number of multi-signature devices and transfer limits. Sub-devices play a security and verification role. This is quite different from blockchain multi-signature.
Users’ Chainless sub-ledgers are backed up on various sub-devices.
Assets can be inherited.
3) Universal Cryptocurrency Community Software
The Chainless Platform’s community software uses the innovatively developed universal cryptocurrency community software Simi, used to direct traffic to the Chainless Platform and its mini-programs!
The creation of the universal community is the biggest innovation of the Chainless system. It builds upon WeChat’s social functions, fully utilizing Web2’s technical advantages to design a universal community system suitable for Web3 concepts. It does not store user private chat data; users have complete control over personal data; integrates private and public domains; automatically pushes content based on user needs; breaks language barriers with automatic multi-language translation—users see content in their native language.
Community capacity is unlimited; users won’t experience the content flooding issue common in large Telegram groups.
Provides rich community building tools and abundant community functions. All universal functions are refined within the Chainless community.
Achieves “one coin, one community.” The coin issuer owns the community.
After more than two years of development, it will be fully launched soon. Participating in the testnet qualifies for airdropped tokens.
Chainless Platform PC Official Website Entry:
https://www.chainlessdw20.com/
Simitalk Entry:
VI. Conclusion: Hong Kong at a Crossroads of Reform
Hong Kong still possesses multiple advantages in systems, finance, geography, etc. Only by breaking traditional thinking can it truly understand and embrace the innovation of crypto finance. The meaning of regulation is not to stifle but to escort; openness is not a risk but an opportunity. Only by promoting pragmatic reforms, improving the legal environment, and pooling global resources can Hong Kong once again become a world-class central hub for digital finance.
A greater opportunity is Hong Kong’s chance to lead the world. The time window is narrowing; only decisive reform can live up to this historical opportunity.
Attached is DeepSeek’s reading impression. Its understanding may not be complete, but it has reference value. The keywords used were: Please propose questions for discussion.
VII. DeepSeek’s Reading Impression
The following are three core questions focusing on the key challenges for Hong Kong’s cryptocurrency development:
1. How can regulatory reform balance innovation and risk?
Hong Kong’s current cryptocurrency regulations (e.g., exchange licensing policies, stablecoin bill) are criticized as being created behind closed doors and lacking market understanding, leading major exchanges to withdraw. To attract leaders like CZ back, Hong Kong needs a more flexible regulatory system (e.g., cross-departmental regulators, public-private collaborative decision-making). But how to foster open innovation while preventing financial risks (e.g., fraud, market manipulation)? Specifically, how to design a regulatory framework that both lowers compliance barriers (e.g., simplifies license applications) and ensures controllable systemic risk?
2. How can Hong Kong build a differentiated competitive advantage (e.g., in stablecoins, antique coins)?
Hong Kong plans to attract global capital by issuing a USD stablecoin USHK (competing with USDT) and antique coins (using blockchain to solve counterfeiting), but these strategies face challenges:
How can USHK truly surpass USDT?
USDT, though opaque, has a massive user base. How can Hong Kong’s stablecoin solve bank redemption thresholds, cross-border payment efficiency, and win market trust?
Is the antique coin feasible?
The antique market long suffers from counterfeiting and chaotic valuations. To establish global authoritative appraisal and certification systems, what resistances must Hong Kong overcome (e.g., opposition from industry vested interests, lack of technical standards)?
3. How to attract and retain crypto talent and capital?
Policies like donating crypto for passports and staking tokens to hire foreign programmers are proposed, but the crypto industry highly relies on global talent mobility.
Are these policies sufficient?
Compared to competitors like Singapore and Dubai, what additional incentives are needed regarding taxes, visas, and legal systems?
How to avoid a “flash in the pan”? Hong Kong missed crypto opportunities before (e.g., regulatory tightening after FTX’s collapse). How to ensure policy continuity now so enterprises and talent put down long-term roots?
These three questions correspond to regulation (institutions), market (competitiveness), and talent (execution), and are key to determining whether Hong Kong can become a global crypto hub.
