Source: Meta Era

Author: Sun Peihan

Introduction to Hong Kong Government's Web3 Policy

With the release of the "Policy Declaration on the Development of Virtual Assets in Hong Kong" ("Hong Kong Declaration") on October 31, 2022, the Hong Kong Special Administrative Region Government has clarified its policy position and guidelines for the development of the virtual asset industry and ecosystem. Following the Hong Kong Declaration, the government's regulatory framework and support policies for the virtual asset industry have become increasingly clear.

Time

Content

Policy Announcement

October 2022

The Hong Kong government released the "Policy Declaration on the Development of Virtual Assets in Hong Kong," announcing the promotion of Hong Kong as a global center for virtual assets.

Policy Implementation

Early 2023

The government proposed to promote the development of the Hong Kong Web3 industry in the "Financial Budget" and allocated HK$50 million in the February financial budget to accelerate the development of the Web3 ecosystem. The Web3.0 Association was established in April.

Policy Enhancement

June 2023

The Hong Kong government further emphasized the importance of Hong Kong in the Web3 field and established a dedicated task force.

Table: Evolution of Hong Kong's Web3 Policy

In addition, Hong Kong's financial regulatory authority, the Securities and Futures Commission (SFC), has already begun supervising the regulatory framework for the cryptocurrency market and allows for legal operation. This effectively means that cryptocurrency trading platforms in Hong Kong are now formally recognized as part of the financial services industry, similar to other financial platforms such as stock exchanges, fund management companies, and lending enterprises.

This regulation of the cryptocurrency market sends an important signal to the financial and capital markets: funds that were previously unable to enter the cryptocurrency market due to lack of government regulation can now enter the field through the advantage of Hong Kong's financial hub; traditional financial institutions that were previously unable to cooperate with cryptocurrency institutions are now eligible to do so. Currently, Hong Kong subsidiaries of state-owned enterprises such as Pacific Insurance have begun exploring the cryptocurrency field, and this trend is also gaining momentum globally.

According to data from Foresight News, at least 10 institutions have announced their intention to apply for a Virtual Asset Service Provider (VASP) license in Hong Kong, which is the most comprehensive and significant cryptocurrency trading license currently available in Hong Kong. This includes cryptocurrency institutions such as HashKey, OKX, Huobi, Bitget, BitMart, Bybit, BitMEX, OSL, and Gate, as well as some traditional financial institutions.

Legal compliance (minimizing personal and financial risks) + compliant exchanges (providing avenues for issuing and trading tokens) have laid a solid foundation and eliminated concerns for Web3 enterprises, making them highly attractive.

How Can Web3 Enterprises Settle in the Hong Kong Science Park from Scratch?

Behind the increasingly complete infrastructure of exchanges, how can small and medium-sized Web3 enterprises participate in the wave of Hong Kong's Web3 policy? What are the requirements? The following will use the Hong Kong Science Park as an example to provide a detailed introduction.

The Hong Kong Science Park is a large-scale, sunlit, and green technology research and development base initiated by the Hong Kong government. Its main goal is to promote innovation and technological development in Hong Kong, cultivate technology talents, promote exchange and cooperation between academia and business, and ultimately create benefits for society and the economy. The Hong Kong Science Park provides abundant resources and facilities to create the best environment for technology and innovation enterprises to assist in their research, development, and commercialization. Based on existing information, the connection between the Hong Kong Science Park and Web3 and Web3 enterprises can be summarized as follows:

• The Hong Kong Science Park is a popular location for attracting global Web3.0 entrepreneurs, actively embracing Web3.0 and launching support policies in recent months.

• There are over 300 companies in the Science Park, covering areas such as blockchain, AI, digital content, and network security.

• The Hong Kong Science Park collaborates with G-Rocket to provide financial support and ecological services for Web3.0 entrepreneurs settling in Hong Kong.

• The Science Park provides approximately HK$1.3 million in funding for start-ups, with a cultivation period of 3 years.

• Start-ups can apply for multiple support programs such as the Incubation Program, Enterprise Acceleration Program, and Elite Enterprise Program.

• The Science Park provides office and R&D support such as rental subsidies and wage subsidies, and offers a good environment for technology and innovation with collaboration opportunities.

Support Policies of the Hong Kong Science Park

Based on the level of support, it can be divided into three special support programs: the IDEATION Program, Incubation Program (Incubation Program for Innovation and Technology), and Enterprise Acceleration Program.

IDEATION Program

Program Overview

This program aims to help companies implement innovative ideas and succeed in entrepreneurship, with a maximum subsidy of HK$100,000 for a period of one year.

Program Requirements

There are specific requirements for project progress, and only projects close to launch can apply. It is not necessary to have a fully developed product, but a local investor's recommendation is required. As for the company, it must be registered in Hong Kong for no more than two years before the application start date, or the applying team must have established a limited company in Hong Kong before the start of the program.

Program Application Process

• Prepare a business plan covering the review criteria, with templates available on the official website

• Complete the online application process and upload supporting documents

• Review criteria:

  • Team quality and capabilities

  • Feasibility of business operations

  • Innovation of the project

  • Technological research and development content

Program Application Time

• September 2023 (Group 24-14)

  • Application acceptance period: 12:00 pm on September 1, 2023, to 12:00 pm on September 29, 2023

  • Review meeting (for selected applications only): Late October to early November 2023

  • Announcement of results: Late November 2023

Incubation Program (Incubation Program for Innovation and Technology)

Program Introduction

The program lasts for 3 years, with a maximum subsidy of HK$1.39 million. The difference from the IDEATION Program is the requirement for a developed product, at least an MVP version.

Program Requirements

1. Must be a limited company registered in Hong Kong within 5 years

2. Must have at least 2 full-time employees, with at least half of the full-time employees engaged in scientific research

3. The founding team must hold at least 51% of the company's shares

4. The company's product is in the prototype stage or is a minimum viable product (MVP) validated by the market.

Program Application Process

1. Submit the application online

2. Due diligence meeting

3. Admission review meeting (ten-minute presentation and ten-minute Q&A)

4. Admission notification

Program Application Time

The entire process generally takes around 30 days if all documents are complete.

Enterprise Acceleration Program

Program Introduction

The program helps start-up companies drive business development, quickly enter the global market, and expand internationally. It focuses on high-potential start-up companies in the acceleration growth stage. The program lasts for 2 years, with a maximum subsidy of HK$4.8 million, but requires the government to hold shares, although the shareholding percentage will be lower than that of Cyberport.

Program Requirements

• Applying companies are in the growth stage and are committed to expanding their scale globally

• Currently under the incubation of the Hong Kong Science Park or an existing partner company of the Science Park

• The applying company must have its headquarters and administrative department in Hong Kong, and the CEO must be based in Hong Kong for the long term

• The number of employees does not exceed 100

• At least half of the full-time employees in Hong Kong are engaged in scientific research

Program Application Time

Case by case

Web3 Talent Subsidy Policy

Hong Kong's Web3 talent subsidy system mainly targets locally employed Hong Kong employees. If a company employs local Hong Kong personnel, the company will be eligible for government-provided talent compensation. For example, a Hong Kong resident with a doctoral degree is eligible for a monthly subsidy of HK$32,000; a master's degree holder can receive a monthly compensation of HK$20,000; and a bachelor's degree holder is entitled to a monthly compensation of HK$18,000. These compensations are paid directly to the employer to reduce the cost of employment in Hong Kong.

In addition, Hong Kong also has two talent importation programs: the Talent Admission Scheme and the Quality Migrant Admission Scheme. Outstanding talents can choose the Quality Migrant Admission Scheme. However, for those whose qualifications or experiences are not outstanding, they can choose the Specialist Admission Scheme, which is guaranteed by Web3 enterprises.

For the Specialist Admission Scheme, specific enterprises (such as Web3 companies in Cyberport) need to provide guarantees in order to bring in talent through the work visa route. For example, holding a work visa for seven years qualifies for permanent residency in Hong Kong. It is worth noting that the guaranteeing enterprise must meet a certain annual tax threshold, meaning that the Web3 project must operate, comply with regulations, generate profits, and pay taxes in order to apply for the Specialist Admission Scheme. Companies attempting to evade taxes and shell companies do not meet this requirement. Additionally, employees under the Quality Migrant Admission Scheme can freely change jobs within seven years, while employees under the Specialist Admission Scheme cannot change the guaranteeing company during this period.

Furthermore, the Science Park also provides a pool of research and development talents at the doctoral level, who can also enjoy the aforementioned monthly subsidy of HK$32,000, but the talents receiving the subsidy must work in Hong Kong.

Costs and Requirements for Settling in the Science Park

The Science Park rents office space based on area, with office rents disclosed on the official website at approximately HK$23-25 per square foot, where 1 square meter is approximately equal to 9 square feet.

1. The Science Park requires over half of the R&D positions of settling companies to be located in the Science Park, and the project application review will emphasize the requirement for technical and R&D positions. When determining whether it is an R&D position, submission of employee resumes and dedicated personnel review will be required.
2. When applying to the Science Park, proof of the company being a technology-based company will be required.
3. When applying to the Science Park, a complete technical research and development plan, incubation plan, and operational plan will be required.
4. In addition to submitting materials, an interview of the company and project will also be required when applying to the Science Park.

Summary

Overall, the comprehensive regulatory policies of the Hong Kong government for the Web3 industry mean that the Web3 industry in Hong Kong has a clear positioning, not only being legal and compliant but also eligible to apply for similar incentives and subsidies as other high-tech enterprises. The licensing system for exchanges provides legal guarantees for the subsequent development of Web3 enterprises (such as token issuance). In addition to providing cash subsidies for startups employing Hong Kong residents, it also offers a policy (Specialist Admission Scheme) for companies to obtain permanent residency for mainland Chinese employees, who are not allowed to change companies within 7 years, which will to some extent increase the attractiveness and loyalty of outstanding employees to companies. As one of the traditional world financial centers, will Hong Kong be able to combine the Web3 wave and give birth to a group of outstanding Web3 enterprises? Let's wait and see.

References

[1] https://zhuanlan.zhihu.com/p/607819536

[2] https://www.hkstp.org/zh-cn/contact-info

[3] https://web3caff.com/zh/archives/55527

[4] https://news.marsbit.co/20230731205833453465.html

[5] https://web3caff.com/zh/archives/64722

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