The Chinese special administrative region of Hong Kong is aiming to become a leading crypto hub, as the region started to promote the development of Web3. At the same time, its securities regulator has begun to actively regulate the crypto space, awarding licenses for retail crypto trading.
On June 30, the Hong Kong government announced that it established a task force that will be in charge of ethically promoting the development of Web3 in the region. The team will include 11 key government officials and 15 industry participants.
The government of Hong Kong has unveiled a task force dedicated to driving the advancement of Web3. According to a June 30 statement, the group comprises a mix of key government officials and industry participants. https://t.co/Yo9gnUquvI
With all the new developments happening in the region, Cointelegraph reached out to key players in Hong Kong to learn more about the state of crypto in the region and what the community can expect from Hong Kong in the near future.
More crypto events, stablecoins and tokenization of real-world assets
Animoca Brands co-founder and executive chairman Yat Siu, who was appointed to Hong Kong’s Web3 task force in July, told Cointelegraph in a statement that the community can expect an increase in “events, activities, and companies choosing Hong Kong as their Web3 headquarters.”
According to Siu, the Hong Kong FinTech Week, which is one of Asia’s largest fintech conferences, will feature various Web3 technologies. In addition, Siu also pointed out that it coincides with the first iteration of the ApeFest 2023, which is an exclusive meet-up event for Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) NFT holders. Siu explained:
“Speaking from my personal perspective, we anticipate robust support for Web3 initiatives from both the Hong Kong government and the local community, including organizations like ours.”
Meanwhile, Matthew Cheung, the chief strategy officer of the Hong Kong Virtual Asset Exchange (HKVAX), one of the first to receive in-principle approval from the SFC, also shared perspectives on the trends that may surface in the coming months.
Cheung told Cointelegraph in a statement that stablecoins and the tokenization of real-world assets have the most attention in Hong Kong. The executive anticipates that there will be a regulatory focus in such areas. “The city is poised to foster innovation, drive blockchain and crypto technology applications, and provide increased support for the digital economy,” he added.
Apart from these, both Siu and Cheung said that the trend of the SFC awarding licenses to exchanges is likely to continue in the near future. According to Siu, there has been a significant surge in applications. “The recent approvals are indicative of the Hong Kong government’s and SFC’s willingness to foster a conducive environment for Web3 projects in Hong Kong,” Siu said.
Meanwhile, Cheung said that this would lead exchanges to become more regulated. He said that the SFC’s proactive stance and transparent framework provide development opportunities for trading platforms that are compliant with the rules.
Crypto projects struggle to find banks in Hong Kong
On July 17, mainstream media outlet The Wall Street Journal reported that large banks are still not opening up to crypto in the region. Citing bankers, the outlet wrote that two global banks with operations within the city have still ruled out activities directly related to crypto trading.
Crypto exchanges are under pressure in the U.S. but Hong Kong’s government is welcoming them with open arms. The one snag: the city’s banks won’t take their money. https://t.co/mZcUe7uCJP
However, according to Cheung, acquiring a license from the SFC solves this issue. He explained that the license is not only for regulatory compliance but is also for “gaining access to the banking system.” Cheung explained that:
“One of the advantages of obtaining a license is to open up the banking system, which has historically been a challenge for crypto projects. We have acknowledged similar difficulties in the past.”
Going forward, the executive believes that as regulatory support for Web3 development grows, relationships between Web3 projects and the banking system are also improving.
On June 15, the Hong Kong Monetary Authority (HKMA), the region’s central bank, put pressure on major banks like Standard Chartered and HSBC to accept exchanges as their clients. This appears to bolster the government’s willingness to support the establishment of crypto projects in the region.
According to Siu, many of their portfolio companies have been able to establish bank accounts in the region successfully. The Animoca Brands chairman shared advice that companies facing difficulties should try engaging with a local organization such as InvestHK – a government department dedicated to aiding foreign companies entering the region.
Foreign crypto projects welcome in Hong Kong
Meanwhile, Siu also added that there are numerous advantages for foreign crypto projects to established offices in Hong Kong. The executive noted that this includes access to a Web3-friendly market with clear regulations and a place that offers a “vibrant lifestyle.”
Siu said that while its proximity to China might raise concerns, it can also be viewed as an opportunity. “We believe that Hong Kong is positioned to become China’s crypto gateway, representing a substantial potential that should not be ignored,” he noted.
When asked the same question, Cheung also had similar thoughts. The executive said:
“Absolutely. Hong Kong, as an international financial center and innovation hub, offers ample opportunities for foreign crypto projects. Its legal framework, financial infrastructure, and favorable geographical position make it an attractive destination for setting up offices.”
According to Cheung, this move can potentially enable projects to collaborate with the markets and investors that are located within the Asia-Pacific region. He added that it could also help projects benefit from the financial ecosystem in Hong Kong.
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The police’s use of facial recognition technology is to be significantly expanded in an attempt to catch more offenders, ministers have announced.
Under the plans, 10 live facial recognition (LFR) vans will be used by seven forces across England to help identify “sex offenders or people wanted for the most serious crimes”, according to Home Secretary Yvette Cooper.
The tech, which has been trialled in London and south Wales, will be subject to strict rules, the Home Office said, but human rights groups have warned it is “dangerous and discriminatory”.
Amnesty International UK said the plans should be “immediately scrapped”, with facial recognition proven to be “discriminatory against communities of colour”.
“It has been known to lead to misidentification and the risk of wrongful arrest,” said Alba Kapoor, the charity’s racial justice lead, “and it’s also known to be less accurate in scanning the faces of people of colour.”
The Home Office said the LFR vans will only be deployed when there is “specific intelligence”, and will be operated by trained officers who will check every match made by the cameras.
The vehicles will also only be used against bespoke watch lists, compiled for each use under guidelines set by the College of Policing.
The vans will be operated by police forces in Greater Manchester, West Yorkshire, Bedfordshire, Surrey and Sussex (jointly), and Thames Valley and Hampshire (jointly).
Image: The 10 vans set to be deployed to police forces across England.
Pic: Home Office
‘The most serious offenders’
Ms Cooper has said ministers are focused on making sure “there are proper safeguards in place”.
As part of the plans, the home secretary has announced she will be launching a consultation on how and when the cameras should be used, and with what safeguards, which the government will use to draw up a new legal framework for the use of the cameras.
Ms Cooper said the tech had been used in London and South Wales “in a targeted way”, and helped catch “the most serious offenders, including people wanted for violent assaults or for sex offences”.
According to the Metropolitan Police, the tech has led to 580 arrests for offences such as rape, domestic crime and knife crime in the space of 12 months.
The government has pointed to independent testing by the National Physical Laboratory, which it said found the tech was “accurate” and showed “no bias for ethnicity, age, or gender”.
Liberty has welcomed the government’s decision to create a statutory framework for using facial recognition, but said that should be in place before the tech is rolled out.
“There’s no reasonable excuse to be putting even more cameras on our streets before the public have had their say and legislation is brought in to protect all of us,” said a statement.
The civil liberties charity cited how more than 1.6 million people have had their faces scanned in South Wales, mostly on football match days in Cardiff city centre.
But Lindsey Chiswick, from the National Police Chiefs’ Council (NPCC), has said the expansion “is an excellent opportunity for policing”, and will help officers locate suspects “quickly and accurately”.
Police should consider disclosing the ethnicity and nationality of suspects when they are charged in high-profile and sensitive cases, new national guidance says.
Coming into force today, it says there must be a policing reason to release the information, such as where there are high levels of disinformation, if it will improve public safety, or if it is significantly in the public interest.
A Home Office spokesperson told Sky News they will support the new guidance by authorising the release of relevant accompanying immigration information if appropriate.
The change comes after two men charged over the alleged rape of a 12-year-old girl in Nuneaton were reported to be Afghan asylum seekers, sparking protests.
Warwickshire Police did not confirm the immigration status, leading to Reform UK accusing them of a “cover-up”, something the force strongly denied.
Responding to the row, Home Secretary Yvette Cooper said last week she wanted police to be more transparent, and that new guidance was being worked up.
Speaking to Sky News after the new instructions were announced, policing minister Dame Diana Johnson said “we welcome the guidance” which the government thinks is “really helpful”.
She added: “We want to be as transparent and as open as possible with the public” – and this includes releasing ethnicity and nationality unless there is “good reason not to”.
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Migration protesters face off
How high-profile cases sparked debate
When considering what information to release, police must consider contempt of court laws which aim to give defendants a fair trial, as well as media guidance from the College of Policing.
Until now, the media guidance said once a suspect has been charged, police can give out information such as their name, date of birth and address. It did not mention anything about ethnicity, nationality, or immigration status.
The Southport murders committed by Axel Rudakubanalast July led to speculation about his ethnicity and immigration status, fuelling riots in many parts of the country.
In the Nuneaton case, Reform leader Nigel Farage said retaining the “basic and sober facts” was “a cover-up that in many ways is reminiscent of what happened after the Southport killings”.
Warwickshire Police said officers “did not and will not cover up such criminality”, and followed national guidance.
Image: Reform leader Nigel Farage argues releasing the information could prevent unrest. Pic: PA
How will new guidance work?
The new guidance says it is at the discretion of the police force to decide whether to release ethnicity and nationality details, and that they must consider the ethical and legal implications.
It says it is not the job of police to verify a suspect’s immigration status, which rests with the Home Office.
The advice has been developed by the National Police Chiefs’ Council (NPCC) and the College of Policing, in consultation with the Home Office and the Crown Prosecution Service (CPS).
Deputy chief constable Sam de Reya, the NPCC lead for communications and media, said: “We saw during last summer’s disorder, as well as in several recent high-profile cases, what the major, real-world consequences can be from what information police release into the public domain.
“We have to make sure our processes are fit for purpose in an age of social media speculation and where information can travel incredibly quickly across a wide range of channels.
“Disinformation and incorrect narratives can take hold in a vacuum. It is good police work for us to fill this vacuum with the facts about issues of wider public interest.”
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One year on from the Southport riots
‘A chilling message’
The guidance is interim, and will be considered as part of a wider review of the College of Policing’s authorised professional practice for media relations later this year.
Chief constable Sir Andy Marsh, the college’s CEO, said officers will continue to police “without fear or favour”.
But the guidance is likely to provoke backlash from anti-racism campaigners. Last week, the Joint Council for the Welfare of Immigrants warned that revealing ethnicity and migration status would “send a chilling message: that some people are inherently more ‘suspect'”.
‘Public trust requires transparency’
A Home Office spokesperson told Sky News they welcome the new guidance, adding: “Public trust requires transparency and consistency from the authorities that serve them.”
They added: “The public, and police forces themselves, want greater clarity on when, why and how information is released and the legitimate and compelling reasons it may need to be withheld.
“The Home Office will support that effort by authorising the release of relevant accompanying immigration information in future cases, where it is appropriate to do so, and where the police have requested it. All cases will of course take account of consultation with the police and CPS.
“The government also asked the Law Commission at the end of February to speed up the elements of its review around the law of contempt in relation to what can be said publicly ahead of a trial.”
Senators in the state of Wisconsin have filed an identical bill to accompany earlier legislation filed in the state’s lower house that aims to closely regulate crypto ATMs.