Dr. Ouyang Mo: New York should learn from Hong Kong in cryptocurrency regulation

By Omer Ozden, CoinDesk; Compilation: RockTree Capital

Companies in the Web 3.0 space are fleeing New York, driven by Washington, D.C.'s recent tough approach to industry regulation. New York's global relevance relative to other major financial centers is waning as regulators rebuff the wishes of the city's leadership -- but China and Hong Kong have proven that doesn't have to be the case.

Over the past 100-plus days, China and the United States have been on different paths in terms of cryptocurrency regulation. After an 18-month period of policy ambiguity, the former appears to have turned around, swiftly implementing common-sense cryptocurrency regulations in Hong Kong to foster innovation and encourage the industry.

Omer Ozden is the chairman of RockTree Capital, an investment fund from the Web3.0 field. He was previously a securities lawyer practicing in New York and Silicon Valley.

New York City Mayor Eric Adams has embraced Web 3.0 from the start, running a pro-cryptocurrency campaign and initially even accepting bitcoin for his salary. The elected official is aggressively touting the benefits of Web 3.0 and laying out a blueprint for New York's economic recovery, but bureaucrats in Washington disagree.

Currently, a handful of unelected individuals in Washington, D.C., are exercising shockingly authoritarian powers as regulators, contrary to New York’s stated desire to move away from an antiquated financial system and toward a digital economy.

Great changes in Hong Kong, China

On April 11, Li Jiachao, Chief Executive of the Hong Kong Special Administrative Region, attended the inauguration ceremony of the Hong Kong Web 3.0 Association and delivered a speech.

Li Jiachao said that innovation and technology are key development areas in Hong Kong, and we must persist in promoting economic growth through technological innovation.

The development of Web 3.0 is now at the golden starting point. This disruptive technology can change many original business operation models and create more new opportunities at the same time. Facing the development trend of Web3, we must dare to be the leader of this wave of innovation.

He believes that Web 3.0 plays a key role in the development of financial technology. At the end of last year, he issued a virtual asset policy declaration, which shows that the government has an open attitude and firm determination. The government should establish appropriate supervision for the market, and the new licensing system for virtual asset service providers will be implemented in June to ensure the steady and orderly development of the market.

**This new framework, implemented on June 1st, provides clarity to broker-dealers, investors and cryptocurrency exchanges, while also ensuring that retail investor participation is fully considered, and is also a future regulation for other Web 3.0 industries in China As a testing ground for innovation and development, the recovery of Hong Kong as a whole has also accelerated. **

The big apple has gone sour

New York benefited from Hong Kong's early warning, and now, with U.S. regulators adopting restrictive measures similar to those China took two years ago, the Web3 industry that Adams sought to support, including venture capital funds and projects, has left Silicon Valley and other parts of the United States. Most worryingly, Coinbase, which is pro-regulatory, is also considering leaving the US due to the current environment in the US. The Web3.0 industry is sharp!

As part of Hong Kong's move to embrace cryptocurrencies, Hong Kong regulators have drawn up reference guidelines for the issuance of stablecoins, and a digital Hong Kong dollar-based stablecoin is apparently in the works.

In March, US regulators forced Signature Bank to close, even though the bank was still solvent. Former congressman and board member Barney Frank has publicly stated that the closure of the bank by U.S. authorities was politically motivated to send a strong anti-cryptocurrency message. Meanwhile, with the SEC suing cryptocurrency exchanges in the U.S., Hong Kong has been reaching out and lobbying them to set up operations in Hong Kong.

Based on my experience as a Web 2.0 and Web 3.0 investor, and decades of experience as a U.S. securities attorney at large international law firms in New York and China, I absolutely feel that lawmakers are quick to enact loose, sensible laws, Like engineers developing smart code quickly is critical to fostering innovation and growth. **

**The question that should be considered in making the right law is: How do we promote innovation and economic growth? **This is the question that Adams has been asking, and it is also the question that Li Jiachao is asking. **Unfortunately, the SEC has framed the most important regulatory question in the US as - What are securities? **

Federal lawmakers and New Yorkers could suffer the same consequences from this cautionary tale unless they embrace blockchain. Representatives in Congress this month introduced the SEC Stabilization Act to overhaul the SEC and remove Chairman Gary Gensler for a series of abuses. If the unelected chairman unilaterally steers the country in a direction diametrically opposed to the wishes of the elected mayor of the country's most populous city and tens of millions of U.S. cryptocurrency users, then Adams and his constituents should learn from the experience. Learn your lesson and act now like the people of Hong Kong because New Yorkers are rapidly losing the two things they love most - money and freedom.