Time flies, and 2024 has come to the end of the year. According to international practice, it is time to review the industry progress of the past year.
This year, compliance has always been the main theme of China's Web3.0 development. From the promotion of regulatory systems such as the virtual asset service provider (VASP) license and stablecoin in Hong Kong, China, to the exploration of RWA financing for mainland Chinese companies, to the cross-border application testing of digital RMB, the interaction between policies and markets continues to promote the standardization process of the Web3.0 industry.
Next, Mankiw will review the annual hot events and trends around the compliance keywords in 2024.
Compliance and openness, the rise of the Asian Web3 bridgehead
In 2024, the top priority for China's Web3.0 is the opening of Hong Kong's compliance. The policy centered on the Virtual Asset Service Provider (VASP) license not only brings clear supervision to the entire Chinese market, but also comprehensively promotes compliance and openness, attracting global capital and enterprises to influx, and gradually establishing Hong Kong's position as an Asian crypto asset hub.
In 2024, virtual asset trading platforms including HashKey Exchange, OSL, HKVAX, HKbitEX, Accumulus, DFXLabs and EX.IO were approved and officially opened to Hong Kong retail investors, marking the maturity of the compliance system of Hong Kong's virtual asset market. At the same time, Hong Kong regulators further clarified the boundaries of compliance, and regulatory details for stablecoin issuers, custodians, OTC and other sub-sectors were also introduced to ensure market security and transparency.
These measures not only enhance the credibility of Hong Kong's digital asset market, but also attract two-way inflows of capital and enterprises. As of November 2024, Hong Kong Cyberport has gathered more than 270 Web3 concept companies, with a cumulative financing scale of more than HK$400 million. The BTC spot ETF launched in the first half of this year has achieved a net inflow of nearly US$500 million. In addition, Hong Kong has also actively held various Web3 events, attracting the participation of global industry professionals. For example, the Hong Kong Fintech Week held in October this year attracted more than 500 exhibitors and tens of thousands of participants.
As of writing, Hong Kong's ongoing Web3.0 projects include the Ensemble Sandbox Project and the e-HKD+ Project. At the same time, there are more virtual asset trading platforms that have applied or are waiting for approval. As the Web3 bridgehead in Asia, Hong Kong is gradually opening up a compliant virtual asset market in a policy-led and market-driven manner. In the future, with the coordinated advancement of supervision and technology, Hong Kong is expected to continue to lead in Web3 compliance innovation and provide demonstration and reference for other regions.
Dual-track exploration, prohibition of transactions and property protection in parallel
In 2024, the judicial system of mainland China will further clarify its position on virtual currency supervision and legal application. In accordance with the spirit of the "924 Document", courts in various places have defined legal boundaries for the circulation and use of virtual currency, and gradually recognized its economic value in property disputes.
In judicial practice, courts in various places generally emphasize that virtual currency cannot be used as a financing, payment tool or transaction medium. For example, the Shenzhen Court ruled that the payment of wages with virtual currency is an invalid act; the Xiangyin Court determined that the use of virtual currency to repay debts is invalid. These precedents further consolidate the positioning of virtual currency as "prohibited from circulation" under the mainland legal framework.
At the same time, some precedents also show the judicial system's flexible handling of property rights protection. In a financing contract dispute case, the Shanghai High People's Court clearly determined that virtual currency has property attributes and can be protected by law as property rights. In addition, in many previous cases of currency theft, the judges characterized it as property theft rather than illegal acquisition of computer data, which further reflects the determination of the property attributes of virtual currency in judicial practice.
This series of cases not only provides a clearer basis for the legal application of virtual currency, but also emphasizes its circulation restrictions and investment risks.
Policy support, blockchain technology accelerates implementation
In sharp contrast to the regulation of virtual currency, mainland China maintains an attitude of active support and promotion for blockchain technology and related applications. For example, at the second meeting of the 14th National Committee of the Chinese People's Political Consultative Conference held from March 4 to 10, 2024, the widespread application of blockchain technology was listed as a key topic as a scientific and technological innovation. During the meeting, it was proposed to strengthen basic research on blockchain, enhance independent innovation capabilities, and support its widespread application in key areas such as finance, logistics, and energy.
Corresponding to this are the support policies issued by local governments. For example, on February 23, the Hangzhou Municipal Bureau of Commerce formulated and publicized the "Implementation Plan for Hangzhou's Three-Year Action Plan to Promote Digital Trade and Power City (Draft for Comments)", which mentioned guiding the development of new formats such as metaverse, digital twins, and digital collections, and developing digital product trade such as digital media and digital publishing; on March 22, the Shandong Provincial Department of Industry and Information Technology issued the "Shandong Blockchain Technology Innovation and Industrial Development Action Plan (2024-2025)", which mentioned: Integrate and apply blockchain, big data, metaverse and other technologies to help develop new cultural and creative products such as digital intangible cultural heritage, digital collections, and digital trendy toys.
At the same time, the promotion of the digital RMB (e-CNY) continues to accelerate, especially in the fields of cross-border payment and wholesale settlement. In February, the Shanghai Municipal Government issued the "Implementation Plan for Shanghai to Implement the Overall Plan for Comprehensively Docking with International High-Standard Economic and Trade Rules to Promote the High-Level Institutional Opening of the China (Shanghai) Pilot Free Trade Zone", proposing to orderly promote the digital RMB pilot and expand application scenarios; in November, Shanghai held a deployment meeting for the pilot application of the digital RMB and formulated a new round of action plans. In addition, the pilot scope of the digital RMB in Hong Kong and Macao has been further expanded, and the scale of cross-border transactions has steadily increased, becoming an important part of China's Web3.0 infrastructure.
Overall, the policy support of mainland China around blockchain technology and its applications in 2024 will not only promote the construction of digital financial infrastructure, but also provide a new compliant development path for the Web3.0 ecosystem. In future development, these innovative applications will continue to deepen, laying the foundation for the digital upgrade of the domestic market and international competitiveness.
RWA, a new paradigm for cross-border financing of Chinese enterprises
In 2024, the tokenization of real assets (RWA) gradually moved from concept to implementation, becoming one of the core trends of the Web3.0 industry. In this wave, Chinese companies have also begun to explore compliant cross-border financing models, providing a new solution for the integration of traditional assets and the digital economy.
In August 2024, Ant Chain and Longxin Group jointly launched the new energy charging pile RWA project and successfully completed RMB 100 million in financing, opening up a new compliance path for the integration of traditional assets and the digital economy. Subsequently, at the Hong Kong Fintech Week in October, Ant Chain officially launched the RWA infrastructure "Two Chains and One Bridge" cross-border platform, focusing on the tokenization of traditional assets such as real estate, bills and supply chain finance, and promoting the standardization and compliance of cross-border asset circulation.
At the policy level, Hong Kong took the lead in testing the waters and exploring the compliance path of RWA. A number of initiatives, including the e-HKD pilot project and the Ensemble sandbox program, are gradually improving the compliance standards of the RWA industry and providing security for cross-border transactions. In contrast, although mainland China has not yet issued policies specifically for RWA, it has laid the foundation for blockchain technology and digital financial infrastructure construction. Coupled with Hong Kong's cutting-edge exploration in the field of RWA, it has created conditions for mainland companies to participate in this trend with the help of offshore markets.
With the continuous improvement of the regulatory framework and the expansion of cross-border application scenarios, RWA may become an important tool for Chinese companies' digital financing and global asset allocation in the future.
Crypto Going Global, Finding New Paths for Compliance Participation
In 2024, against the backdrop of the rapid development of the global Web3.0 industry, Chinese companies, facing the strict domestic regulatory environment, will gradually turn their attention to Hong Kong and even overseas markets to explore new paths for compliance participation. In particular, Hong Kong's open policies, mature regulatory system and homologous cultural system have undoubtedly become the most attractive choice. At the same time, Europe, such as Malta, Asia, such as Thailand, and the United Arab Emirates in the Middle East have also become important choices for Chinese companies to deploy Web3.0 due to their flexible financial policies and open digital economic environment.
However, going overseas does not mean evading supervision. Instead, companies need to pay more attention to compliance requirements, from the establishment of legal structures to cross-border capital flows, to ensure global operations within the legal framework. For example, within the scope of policy permission, tools such as offshore funds and digital asset custody platforms can be flexibly used to gradually explore feasible paths to participate in the digital economy.
Mankiw Lawyer Summary
In 2024, China's Web3.0 industry will gradually show a compliance trend in policy adjustments and market innovations. From the leadership of Hong Kong's VASP licensing system, to the trial of RWA cross-border asset management platforms, to the expansion of the boundaries of crypto going overseas, these keywords not only depict the outline of China's Web3.0 compliance development, but also provide a reference for the further evolution of future policies.
For enterprises, compliance is the basic premise for embracing the Web3.0 market, while cross-border layout, technological innovation and policy communication are key breakthroughs. Against the backdrop of accelerating global competition, how to flexibly layout within the compliance framework and seize market opportunities will become a core issue that Chinese enterprises must solve.
As a Chinese Web3.0 law firm, Mankiw will continue to pay attention to China's Web3.0 industry trends and policy developments, provide professional compliance consulting and legal services to enterprises, and help them move forward steadily in the new era of Web3.0.
Hui Xin
Clement
Joy
YouQuan
Davin
Catherine