Hong Kong's blockchain policy has recently shown signs of fluctuation, with the crypto market's heat plummeting from its global peak in August, sparking industry concerns about regulatory stability.

The Core Contradiction in Policy: While the Hong Kong government continues to express support for the development of stablecoins and tokenized assets, mainland regulators are tightening restrictions on mainland financial institutions' participation in Hong Kong's RWA business, sending complex signals.

Author's Analysis: The author suggests the regulatory intent is to allow Hong Kong to participate in the US-led blockchain economy using its local resources, while strictly limiting deep involvement from the mainland to control risks and uncertainties.

Blockchain as the "Digital Economy WTO": Blockchain is viewed as a system that will build an efficient global resource allocation network. The US is accelerating stablecoin legislation and asset tokenization, competing for rule-making dominance.

China's Strategic Choice & Hong Kong's Role: China faces a strategic choice, with Hong Kong acting as an "experimental field." Its aims are to explore pathways and cultivate talent, while simultaneously preventing risks from spreading to the mainland.

Recommendations for Practitioners: Practitioners could focus on on-chain DeFi businesses and seek opportunities during the US regulatory window. However, they must exercise caution regarding RWA operations involving mainland funds and assets.

Summary

Author: Meng Yan, republished from the WeChat public account: "Meng Yan's Blockchain Thoughts"

When I visited Hong Kong in early August, it was the peak of the hype cycle for Hong Kong's stablecoin and RWA developments. I described the scene at the time in a previous article:

"With stablecoin legislation in the US and Hong Kong, and the resulting stock and crypto market trends, everyone in Hong Kong is now talking about stablecoins and RWA. Every dinner table discussion revolves around recent market movements and rumors. Titans of traditional finance are actively engaging with crypto opportunities. A large number of entrepreneurs from traditional internet and AI sectors are flocking to Hong Kong seeking Web3 integration. Many forward-thinking businesspeople from traditional industries are also starting to pay attention to crypto. Even our discussions about stablecoins and RWA in hotel lobbies would attract curious inquiries and exchanges from people nearby. We haven't experienced such fervor since 2018. Before arriving in Hong Kong, I guessed that the current global center of crypto was in New York. But coincidentally, a Wall Street banker I know well had just arrived from New York and told me that Hong Kong's crypto buzz far exceeded that of New York. So, if ranked by hype, Hong Kong was absolutely number one in the world at that time."

In less than two months, complex signals have emerged from Hong Kong. On one hand, the Hong Kong government recently reiterated its commitment to advancing stablecoins and tokenized assets in a key comprehensive report, indicating no substantive change in Hong Kong's crypto industry policy. On the other hand, various media reports and rumors corroborate a significant shift in mainland regulatory policy towards mainland financial institutions participating in RWA business in Hong Kong, impacting the territory and creating uncertainty about the prospects of Hong Kong's crypto industry. It's said that Hong Kong's crypto buzz has now dropped sharply, making the text above read with a sense of nostalgia for a bygone era of prosperity. I'm庆幸 my planned analysis article was delayed due to my US itinerary; otherwise, it might feel somewhat awkward to read now.

This isn't the first time. Speculating when Hong Kong's crypto policy "is about to make a big move" is a perennial hot topic in the Chinese crypto community. And lamenting the hesitation and reversals in regulatory policy has become the closing theme for each cycle of discussion.

There's no doubt: contradictory signals indicate the situation is inherently complex, and policy fluctuations reflect the intricate and complicated landscape decision-makers face. So, at this moment, we need to first assess what regulators will do, and second, decide our own course of action.

Regarding the first question, my judgment is this: Regulators will allow Hong Kong to fully participate in the US-led blockchain digital economy using its local resources as the limit, but will strictly restrict deep involvement by mainland individuals and enterprises.

Let's look at the facts and reason. The current situation is this: the application prospects of blockchain technology are becoming clear, but its political and economic consequences remain uncertain.

With the US showing its hand, the application scenario for blockchain is now clear. If anyone ever asks dismissively, "What is blockchain good for besides crypto speculation?" you can give them this answer: Blockchain will host the largest-scale, most efficient resource allocation network in history. Within twenty years, people will be able to buy and sell any asset with digital currency, anytime, anywhere. Capital, future cash flows, control rights, data rights, AI computing power, robot command authority, energy, and all digitizable goods will flow globally in seconds. Any regulatory rules, capital controls, and market barriers not codified in smart contracts will be as ineffective and precarious as isolationist and maritime restriction policies in the 19th century. In short, blockchain is the WTO of the digital economy.

This highly efficient resource allocation network can push market efficiency to the extreme. But so-called market efficiency means "to each his own." In an ideal world, this is good news for most people. But in the real world, determining whose resources get allocated to whom for what purpose is far from purely an economic issue. Especially since this great digital economic exploration isn't happening in the era of "Great Harmonization" when Thomas Friedman wrote "The World is Flat," but in a phase that the US political magazine The New Republic sees as eerily similar to the pre-WWI era. Therefore, it is destined not to be merely a simple, inclusive financial technology advancement, but will inevitably be weighed repeatedly by everyone on the scales of victory and defeat.

The outcome of this contest cannot be overemphasized. Unless this resource allocation network fails to materialize, the rise and fall, glory and shame of individuals, companies, and nations for decades to come will largely depend on their position within this network. Just as an individual's power and wealth depend primarily on their position in the social network rather than personal intelligence or physical strength, an economy's rights and wealth in the digital economy will depend mainly on its position in the blockchain economic network, not its own productivity. As a technology, blockchain aims to create a new digital economic order. Order is also a product, and the most important one of all. Therefore, my view differs from most: an economy's future position in the digital economic order is more important than its possession of AI computing power.

However, predicting one's position in the blockchain order is extremely difficult. Except for the rule-makers, the market makes no promises to anyone. Joining this network could lead to winning or losing.

This uncertainty can be particularly vexing for an economy's decision-makers. I've tried to formalize this dilemma into a set of nested "if-else" logic:

IF I can dominate the blockchain economy as a rule-maker THEN

Join and lead.

ELSE IF I can achieve an acceptable outcome THEN

Join and participate.

ELSE IF I can be a winner, or at least not a loser, by not joining THEN

Do not join; isolate and pursue splendid isolation.

ELSE IF I can start a rival system as a rule-maker THEN

Do not join, and build a rival system.

ELSE — meaning not joining guarantees loss, and starting a rival system has no chance THEN

Join, and maneuver for the long term.

Against this logic, the Trump administration's aggressive blockchain policy becomes understandable. The US simply answered Yes at the first branch. Its main strategy isn't just participation, but dominance and rule-setting.

Most other economies worldwide are likely still calculating gains and losses, or perhaps waiting and seeing. Maybe it won't happen? Maybe the next US administration can flip the table? Maybe wait a few more years?

This line of thinking is very dangerous because the US is sprinting ahead at full speed.

Following the passage of the US stablecoin bill in July, the baton has now been passed to the SEC and CFTC. These two agencies are moving faster than the most optimistic initial expectations, planning to rapidly promote the tokenization of all US publicly traded company stocks and bonds, and introduce a significantly relaxed new regulatory framework for digital asset trading by year-end. This means that by next year, hundreds of millions of global "digital economic nomads" will be able to use stablecoins to buy equity and debt of US companies, protected by the US regulatory system. Once the US抢先 becomes the sole "regular army" in this network, it will be like a bear breaking into an apiary, thrusting its mouth through every digital barrier, sucking the digital honey from the world. Blockchain will pump money, data, computing resources, and power to the US government and corporations day and night. The US, having tasted the sweetness, will not turn back.

There isn't much time left for hesitation.

Among all the "other" economies, China is the most special. In terms of strength, China is the only economy with the potential to compete with the US for dominance in the on-chain digital economy. Although the best timing for this might have passed, it doesn't rule out catching up from behind; China has successful experience in this regard. The current problem is that understanding of this new economic network under construction is still very limited, making it impossible to devise a set of effective strategies like when joining the WTO.

Hong Kong plays the role of this experimental field. It must both participate in the game, explore paths, and cultivate talent, while also preventing the experiment from expanding prematurely and introducing risks and uncertainties into the mainland.

This logic aligns relatively well with the current stance of Hong Kong regulators. If my speculation is correct, this regulatory approach will remain stable for some time.

For Chinese blockchain practitioners overseas, this means there is space to participate, but there are boundaries in operation. Participating in the US-led blockchain economy in Hong Kong is acceptable, especially purely on-chain DeFi business, which will undoubtedly be a contested spot. But at the same time, one must repeatedly verify and ensure compliance regarding funds and assets originating from the mainland. Particularly, the recently heated RWA-ization of mainland assets constitutes high-risk operations requiring extra caution.

For individuals, now is a time window for the entire industry to change chips, rules, and players. One must not hesitate or delay opportunities due to some unclear local regulatory policies. I believe that despite some fluctuations in Hong Kong's policies, the space provided is sufficient. Especially by切入 from DeFi and fully utilizing the tolerance window for DeFi within the US regulatory framework, one can certainly achieve significant accomplishments.

Hong Kong's blockchain policy has recently shown signs of fluctuation, with the crypto market's heat plummeting from its global peak in August, sparking industry concerns about regulatory stability.

The Core Contradiction in Policy: While the Hong Kong government continues to express support for the development of stablecoins and tokenized assets, mainland regulators are tightening restrictions on mainland financial institutions' participation in Hong Kong's RWA business, sending complex signals.

Author's Analysis: The author suggests the regulatory intent is to allow Hong Kong to participate in the US-led blockchain economy using its local resources, while strictly limiting deep involvement from the mainland to control risks and uncertainties.

Blockchain as the "Digital Economy WTO": Blockchain is viewed as a system that will build an efficient global resource allocation network. The US is accelerating stablecoin legislation and asset tokenization, competing for rule-making dominance.

China's Strategic Choice & Hong Kong's Role: China faces a strategic choice, with Hong Kong acting as an "experimental field." Its aims are to explore pathways and cultivate talent, while simultaneously preventing risks from spreading to the mainland.

Recommendations for Practitioners: Practitioners could focus on on-chain DeFi businesses and seek opportunities during the US regulatory window. However, they must exercise caution regarding RWA operations involving mainland funds and assets.

Summary

Author: Meng Yan, republished from the WeChat public account: "Meng Yan's Blockchain Thoughts"

When I visited Hong Kong in early August, it was the peak of the hype cycle for Hong Kong's stablecoin and RWA developments. I described the scene at the time in a previous article:

"With stablecoin legislation in the US and Hong Kong, and the resulting stock and crypto market trends, everyone in Hong Kong is now talking about stablecoins and RWA. Every dinner table discussion revolves around recent market movements and rumors. Titans of traditional finance are actively engaging with crypto opportunities. A large number of entrepreneurs from traditional internet and AI sectors are flocking to Hong Kong seeking Web3 integration. Many forward-thinking businesspeople from traditional industries are also starting to pay attention to crypto. Even our discussions about stablecoins and RWA in hotel lobbies would attract curious inquiries and exchanges from people nearby. We haven't experienced such fervor since 2018. Before arriving in Hong Kong, I guessed that the current global center of crypto was in New York. But coincidentally, a Wall Street banker I know well had just arrived from New York and told me that Hong Kong's crypto buzz far exceeded that of New York. So, if ranked by hype, Hong Kong was absolutely number one in the world at that time."

In less than two months, complex signals have emerged from Hong Kong. On one hand, the Hong Kong government recently reiterated its commitment to advancing stablecoins and tokenized assets in a key comprehensive report, indicating no substantive change in Hong Kong's crypto industry policy. On the other hand, various media reports and rumors corroborate a significant shift in mainland regulatory policy towards mainland financial institutions participating in RWA business in Hong Kong, impacting the territory and creating uncertainty about the prospects of Hong Kong's crypto industry. It's said that Hong Kong's crypto buzz has now dropped sharply, making the text above read with a sense of nostalgia for a bygone era of prosperity. I'm庆幸 my planned analysis article was delayed due to my US itinerary; otherwise, it might feel somewhat awkward to read now.

This isn't the first time. Speculating when Hong Kong's crypto policy "is about to make a big move" is a perennial hot topic in the Chinese crypto community. And lamenting the hesitation and reversals in regulatory policy has become the closing theme for each cycle of discussion.

There's no doubt: contradictory signals indicate the situation is inherently complex, and policy fluctuations reflect the intricate and complicated landscape decision-makers face. So, at this moment, we need to first assess what regulators will do, and second, decide our own course of action.

Regarding the first question, my judgment is this: Regulators will allow Hong Kong to fully participate in the US-led blockchain digital economy using its local resources as the limit, but will strictly restrict deep involvement by mainland individuals and enterprises.

Let's look at the facts and reason. The current situation is this: the application prospects of blockchain technology are becoming clear, but its political and economic consequences remain uncertain.

With the US showing its hand, the application scenario for blockchain is now clear. If anyone ever asks dismissively, "What is blockchain good for besides crypto speculation?" you can give them this answer: Blockchain will host the largest-scale, most efficient resource allocation network in history. Within twenty years, people will be able to buy and sell any asset with digital currency, anytime, anywhere. Capital, future cash flows, control rights, data rights, AI computing power, robot command authority, energy, and all digitizable goods will flow globally in seconds. Any regulatory rules, capital controls, and market barriers not codified in smart contracts will be as ineffective and precarious as isolationist and maritime restriction policies in the 19th century. In short, blockchain is the WTO of the digital economy.

This highly efficient resource allocation network can push market efficiency to the extreme. But so-called market efficiency means "to each his own." In an ideal world, this is good news for most people. But in the real world, determining whose resources get allocated to whom for what purpose is far from purely an economic issue. Especially since this great digital economic exploration isn't happening in the era of "Great Harmonization" when Thomas Friedman wrote "The World is Flat," but in a phase that the US political magazine The New Republic sees as eerily similar to the pre-WWI era. Therefore, it is destined not to be merely a simple, inclusive financial technology advancement, but will inevitably be weighed repeatedly by everyone on the scales of victory and defeat.

The outcome of this contest cannot be overemphasized. Unless this resource allocation network fails to materialize, the rise and fall, glory and shame of individuals, companies, and nations for decades to come will largely depend on their position within this network. Just as an individual's power and wealth depend primarily on their position in the social network rather than personal intelligence or physical strength, an economy's rights and wealth in the digital economy will depend mainly on its position in the blockchain economic network, not its own productivity. As a technology, blockchain aims to create a new digital economic order. Order is also a product, and the most important one of all. Therefore, my view differs from most: an economy's future position in the digital economic order is more important than its possession of AI computing power.

However, predicting one's position in the blockchain order is extremely difficult. Except for the rule-makers, the market makes no promises to anyone. Joining this network could lead to winning or losing.

This uncertainty can be particularly vexing for an economy's decision-makers. I've tried to formalize this dilemma into a set of nested "if-else" logic:

IF I can dominate the blockchain economy as a rule-maker THEN

Join and lead.

ELSE IF I can achieve an acceptable outcome THEN

Join and participate.

ELSE IF I can be a winner, or at least not a loser, by not joining THEN

Do not join; isolate and pursue splendid isolation.

ELSE IF I can start a rival system as a rule-maker THEN

Do not join, and build a rival system.

ELSE — meaning not joining guarantees loss, and starting a rival system has no chance THEN

Join, and maneuver for the long term.

Against this logic, the Trump administration's aggressive blockchain policy becomes understandable. The US simply answered Yes at the first branch. Its main strategy isn't just participation, but dominance and rule-setting.

Most other economies worldwide are likely still calculating gains and losses, or perhaps waiting and seeing. Maybe it won't happen? Maybe the next US administration can flip the table? Maybe wait a few more years?

This line of thinking is very dangerous because the US is sprinting ahead at full speed.

Following the passage of the US stablecoin bill in July, the baton has now been passed to the SEC and CFTC. These two agencies are moving faster than the most optimistic initial expectations, planning to rapidly promote the tokenization of all US publicly traded company stocks and bonds, and introduce a significantly relaxed new regulatory framework for digital asset trading by year-end. This means that by next year, hundreds of millions of global "digital economic nomads" will be able to use stablecoins to buy equity and debt of US companies, protected by the US regulatory system. Once the US抢先 becomes the sole "regular army" in this network, it will be like a bear breaking into an apiary, thrusting its mouth through every digital barrier, sucking the digital honey from the world. Blockchain will pump money, data, computing resources, and power to the US government and corporations day and night. The US, having tasted the sweetness, will not turn back.

There isn't much time left for hesitation.

Among all the "other" economies, China is the most special. In terms of strength, China is the only economy with the potential to compete with the US for dominance in the on-chain digital economy. Although the best timing for this might have passed, it doesn't rule out catching up from behind; China has successful experience in this regard. The current problem is that understanding of this new economic network under construction is still very limited, making it impossible to devise a set of effective strategies like when joining the WTO.

Hong Kong plays the role of this experimental field. It must both participate in the game, explore paths, and cultivate talent, while also preventing the experiment from expanding prematurely and introducing risks and uncertainties into the mainland.

This logic aligns relatively well with the current stance of Hong Kong regulators. If my speculation is correct, this regulatory approach will remain stable for some time.

For Chinese blockchain practitioners overseas, this means there is space to participate, but there are boundaries in operation. Participating in the US-led blockchain economy in Hong Kong is acceptable, especially purely on-chain DeFi business, which will undoubtedly be a contested spot. But at the same time, one must repeatedly verify and ensure compliance regarding funds and assets originating from the mainland. Particularly, the recently heated RWA-ization of mainland assets constitutes high-risk operations requiring extra caution.

For individuals, now is a time window for the entire industry to change chips, rules, and players. One must not hesitate or delay opportunities due to some unclear local regulatory policies. I believe that despite some fluctuations in Hong Kong's policies, the space provided is sufficient. Especially by切入 from DeFi and fully utilizing the tolerance window for DeFi within the US regulatory framework, one can certainly achieve significant accomplishments.