CZ is really brave: he criticized Hong Kong's Web3 policy

On August 27, at the "Hong Kong Crypto Finance Forum" held at the University of Hong Kong, CZ's speech was blunt and explicit, criticizing Hong Kong's Web3 policies. This article presents and interprets the core viewpoints after removing the politeness measures: 01. Regarding Stablecoins: Excessive Control Leads to Failure The current US administration is very astute. Drawing on its business background, it has a deep understanding of Tether's strategic value to the US dollar's global status. Currently, over 100 billion USDT has been used to purchase US Treasury bonds, and Tether is widely used worldwide. The key point is that Americans don't need stablecoins themselves—they can directly use their bank's ACH system to conduct dollar transactions. Almost all USDT users are outside the United States, which effectively expands the dollar's global influence. When the United States passed the GENIUS Act in July, it proposed a policy direction to restrict the development of central bank digital currencies (CBDCs). This move reflects a far-reaching strategic move to curb the dollar's global dominance. Stablecoins are so popular precisely because of their high degree of free circulation and excellent user experience. However, some government-issued digital currencies may have stricter regulation and monitoring, which may in turn affect market acceptance.

In fact, since 2014, more than 20 countries have tried to issue CBDC, but none of them has really achieved success at the market level.

----Personal interpretation----

Hong Kong's issuance of stablecoins has attracted a lot of attention, but in fact, Hong Kong is using strict supervision and monitoring to lead the issuance. For example,

stablecoin issuers must conduct identity verification (KYC) for each holder. Even users who use anonymous or non-custodial wallets must complete verification before participating in transactions. Authorities believe that, in the absence of other effective measures, "identity verification of each holder" is a necessary measure to combat money laundering and terrorist financing. Regarding RWAs: Too Many Licenses, Not Enough Assets. Taking real estate as an example, even the volatile Hong Kong real estate market remains relatively volatile compared to Bitcoin. After the issuance of these low-volatility assets, trading activity is low, and order book depth is insufficient. This leads to low liquidity, and investors are reluctant to place numerous orders, creating a vicious cycle: a shallow order book leads to low trading volume. If investors attempt to transfer hundreds of millions of yuan in funds, transactions are nearly impossible. Even if assets are put on-chain, liquidity remains insufficient, making them more susceptible to unexpected fluctuations and even short-term manipulation. In some places, companies need to apply for different licenses: futures licenses, spot trading licenses, digital currency licenses, bank custody licenses, and so on. When too many licenses are obtained, business models become more limited, and in many cases, even a single business cannot be launched. This is a direct slap in the face of Hong Kong. Moreover, most RWA products made in Hong Kong (especially real estate, funds, and bond tokenization) will be regarded as "securities" or "collective investment schemes (CIS)" by the Hong Kong Securities and Futures Commission. The main licenses involved are: Type 1 License: Securities Trading If your platform facilitates the buying and selling of RWA tokens → Required. Category 4 License: Providing Advice on Securities If your business involves recommending and designing RWA investment plans for clients → Required. Category 6 License: Providing Advice on Institutional Financing If your business involves RWA project issuance or tokenized financing (such as real estate coin issuance) → Required. Category 7 License: Automated Trading Services (ATS) If you operate a secondary market platform (e.g., an STO exchange) → You must apply. Category 9 License: Asset Management If you establish a Tokenized Fund and manage wealth on behalf of clients → You must apply. 03 About exchanges: Don't create independent kingdoms! In the early days of crypto regulation, many countries and regions often chose to employ strict controls to mitigate risk and ensure security. Regulators, fearing errors, often demand that all operations be conducted locally: local licenses, local offices, local staff, local compliance departments, local servers, local data storage, local matching engines, local user bases, and local wallet infrastructure completely independent of foreign operations. This approach is relatively easy to implement in the traditional physical world, such as through safes and physical isolation. However, in the digital currency industry, this distinction is less meaningful. Whether a server is located in Hong Kong, Singapore, or the United States, the chances of a hacker attack are the same because everything operates online. More importantly, if operations were to be split, building a secure wallet infrastructure alone would often require an investment in the billions of dollars. The problem isn't just funding, but also talent shortages—it's difficult to repeatedly recruit hundreds of top global security experts to build this foundational system. The cost of replicating a complete system is effectively equivalent to building a world-class international exchange. From a liquidity perspective, if only local residents were allowed to trade, Hong Kong, for example, with a population of 8 million, or the 200,000 to 300,000 active user base of other smaller countries, simply wouldn't be able to generate sufficient trading volume. Without liquidity, prices would fluctuate drastically, which would be detrimental to users.

As far as I know, most licensed exchanges in Hong Kong are currently operating at a loss. Although they can still maintain themselves in the short term, this loss-making model is difficult to sustain in the long term.

Hong Kong is almost unique in the world in requiring local infrastructure. (See the following for details:) Hong Kong has begun restricting hard wallets!

For more on the plight of exchanges, please refer to: If this continues, will Hong Kong's VATP license 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. However, as the global situation changes, Hong Kong is now very proactive. If US stocks can also be successfully put on the blockchain, it will further consolidate the US's dominance in the global financial market. Other countries may also face the risk of being marginalized if they do not participate in this transformation. For example, the Hong Kong Stock Exchange, as a major exchange with global influence, may see its influence gradually weakened if it is absent from this round of transformation. Other Asian exchanges, such as the Shanghai Stock Exchange, face similar strategic choices. I don't need to interpret this, CZ's words are very straightforward~