Crypto founders, including Binance chief executive Zhao Changpeng, are talking up the Chinese government’s support for Web3, tying a recent Beijing white paper to Hong Kong’s efforts to become a crypto hub, as they face increasing regulatory scrutiny in other parts of the world.
Zhao, Huobi adviser Justin Sun, and Animoca Brands co-founder and chairman Yat Siu all praised the report, titled “Beijing Internet 3.0: Innovation and Development White Paper”, suggesting the moves in Beijing and Hong Kong together signal China’s greater support for Web3. However, the paper makes no mention of cryptocurrencies, which are banned in the mainland.
The Binance chief, known in the industry as “CZ”, on Sunday posted on Twitter photos of the paper published by the Beijing municipal government.
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“Interesting timing on this Web 3.0 white paper from the Beijing government tech committee,” he tweeted on May 27, noting that new virtual asset regulations in Hong Kong take effect on June 1. The tweet was widely circulated in the crypto community, drawing more than 11,700 likes and 2.6 million views by Tuesday.
Interesting timing on this Web 3.0 white paper from the Beijing government tech committee with the June 1st anticipation in Hong Kong. pic.twitter.com/0Ts1UB0jnL
– CZ 🔶 Binance (@cz_binance) May 27, 2023
The Beijing Municipal Science and Technology Commission published the paper on Sunday at an industry forum. The document, at more than 100 pages, takes a broad view of the next-generation internet that encompasses everything from blockchain to the metaverse and artificial intelligence.
“Internet 3.0 is a three-dimensional space that blends the virtual with reality, with highly immersive and interactive experiences,” the white paper reads. The definition covers elements from both the metaverse and Web3, it notes.
Each concept has individually generated hype in the last few years around the idea that it will be the future of the internet. The metaverse is meant to consist of interoperable 3D virtual spaces where people can interact online.
Web3, on the other hand, is the idea of a decentralised web based on blockchain and similar technologies. However, the term Web3 is often used to refer to cryptoassets like digital currencies and non-fungible tokens (NFTs).
For the Beijing government, blockchain is just one of the key technologies for “internet 3.0”, along with artificial intelligence, semiconductors and brain-computer interfaces. cryptocurrencies are noticeably absent from the report, as the central government clarified in September 2021 that trading of such assets in the country was illegal, even as it has continued to promote the industrial use and development of blockchain.
After the 2021 announcement, Binance and Huobi stopped letting people sign up with Chinese phone numbers.
But crypto founders with ties to China, who had left the country during previous crackdowns, are still celebrating the Beijing white paper as a positive sign. Some in the industry have been pinning their hopes on regulatory change in Hong Kong being able to the help thaw a long-term crypto winter, possibly igniting a new bull run, and that the city will become a base for Chinese crypto activity.
Huobi’s Sun, who also founded the blockchain platform Tron, retweeted CZ’s post over the weekend, saying China’s “commitment” to Web3 “reflects a significant step towards recognising the transformative potential of decentralised systems and blockchain-based solutions”.
Yat Siu, co-founder of Animoca Brands, speaks during a panel session on day two of the Qatar Economic Forum in Doha on May 24, 2023. Photo: Bloomberg alt=Yat Siu, co-founder of Animoca Brands, speaks during a panel session on day two of the Qatar Economic Forum in Doha on May 24, 2023. Photo: Bloomberg>
Yat Siu, whose blockchain unicorn Animoca also operates the metaverse platform The Sandbox and sells virtual plots of land, tweeted that China released the paper “with the aim to … promote the #web3 industry after Hong Kong had already started promoting it 6months ago!”
As the crypto industry continues to face intensifying regulatory scrutiny overseas, both CZ and Sun have found themselves in legal hot water in the US. In March, the Securities and Exchange Commission (SEC) sued Sun for selling unregistered securities.
That same month, the Commodity Futures Trading Commission named Binance and CZ as defendants in a suit alleging the company was operating an illegal exchange with a “sham” compliance programme.
Over the past few years, the SEC has sued multiple companies and individuals over the selling of cryptoassets that it considered to be securities. Crypto entrepreneurs have decried the lack of regulatory clarity in markets like the US, which has no specific legislation for such assets.
This is why some see the moves in Hong Kong as promising, with hopes that it signals China is softening its stance towards crypto. Animoca’s Siu said he believes the measures in Beijing and Hong Kong are connected.
“It signals what Hong Kong has always been, a financial centre that acts as the financial intermediary and gateway in [and] out of China, and digital assets will work the same way,” Siu said via email. “Hong Kong, we believe, will experience a talent and innovation boom embraced by the potential of Web3 and has a chance to lead in this category not just regionally, but globally.”
Last week, CZ called coverage of Hong Kong’s new crypto regime from Chinese state broadcaster CCTV “a big deal” that could lead to a bull run. By the next day, CCTV had deleted the report.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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