1. Introduction

As of 2024, there were already 659 million cryptocurrency holders worldwide, making up about 8% of the global population (Crypto.com, 2024). By October 2025, the global cryptocurrency market had expanded significantly, reaching a total value of US$3.87 trillion (Forbes, 2025). As cryptocurrencies – some of the most well-known types of virtual assets in the Web 3.0 ecosystem – gained traction, related concepts such as blockchain, decentralization, smart contracts, and the broader Web 3.0 ecosystem began attracting attention from governments, businesses, and academic institutions. In a bold move to support Web 3.0, U.S. President Donald Trump even launched his own virtual asset called $TRUMP. According to Reuters, the coin quickly sparked market excitement and on 20 January 2025, it reached a $10 billion market capitalization (Howcroft & Conlin, 2025).

Despite its potential, Web 3.0 also brings risks to social and financial security. Previous research shows that since virtual asset transactions are anonymous and globally settled, they are often used by criminals for illegal activities such as scams, money laundering, and drug trafficking (Chainalysis, 2025; United Nations, 2021). Another major concern is the high volatility of virtual assets. For example, the value of $TRUMP dropped sharply to $1.22 billion by October 15, 2025, representing an 87.8% decline. Its unit price fell from $70 to just $6.10 for a 91.3% drop (OFFICIAL TRUMP, 2023). These risks highlight the need for governments and regulators to find a balance between encouraging innovation in Web 3.0 and ensuring proper oversight to protect users and maintain financial stability.

To fully embrace the fintech revolution driven by Web 3.0, Hong Kong’s policymakers must take a balanced approach. On the one hand, they should leverage Hong Kong’s strengths – such as its advanced financial infrastructure and global connectivity – to support innovation and growth. On the other hand, they must also take a proactive role in managing the risks associated with Web 3.0 technologies. It is important to note that different operation models under the Web 3.0 framework possess distinct characteristics. Therefore, Hong Kong’s policymakers need to formulate differentiated strategies based on various Web 3.0 operational models to strike a balance between the development and regulation of Web 3.0.

In the following sections, we will explore the concept of Web 3.0, introduce three key operational models of Web 3.0 assets, outline the development advantages and achievements of Hong Kong’s Web 3.0 industry, and finally put forward relevant recommendations for Hong Kong’s Web 3.0 development.

2. Definition and Features of Web 3.0

2.1 What is Web 3.0?

To stay ahead in the wave of Web 3.0 development, it is essential to understand what Web 3.0 actually is. The term was first introduced in 2014 by Gavin Wood, co-founder of Ethereum, a cryptocurrency platform that lets developers build and run applications and smart contracts. In his vision, Web 3.0 represents a more democratic and decentralized version of the Internet, one that is governed collectively by its users rather than large corporations like Amazon or Microsoft (Kharpal, 2022).

As Web 3.0-related technology has evolved, “Web 3.0” has grown into a broad ecosystem concept that encompasses a wide range of applications. These typically rely on blockchain and virtual assets, covering areas such as cryptocurrencies, decentralized autonomous organizations (DAOs), non-fungible tokens (NFTs), and virtual environments like the metaverse (Wharton Initiative on Financial Policy and Regulation, 2024).

Note that the original Web 3.0 ecosystem concept is built on strong principles of decentralization. This feature makes it difficult to hold virtual asset transactions accountable, which is very different from how traditional finance (TradFi) operates.

Under global efforts to combat money laundering and maintain financial stability, the Web 3.0 financial system had to give up some of its decentralized and anonymous features to ensure compliance. This has led to the emergence of two more regulated models: Centralized Finance (CeFi) and the integration of Traditional Finance and Centralized Finance (TradFi-CeFi). In these two models, Web 3.0 service providers usually have legal identities and physical offices, making it easier for governments and regulators to supervise their operations and ensure financial stability. The original Web 3.0 networks that prioritize decentralization and anonymity are now referred to as Decentralized Finance (DeFi) to distinguish them from the more regulated models. These three frameworks leverage Web 3.0 technology at different levels and focus on distinct aspects of the financial ecosystem. While they operate in different ways, all three hold significant potential to transform the global market today (Hong Kong Institute for Monetary and Financial Research, 2024). In the following section, we will compare the key features of the three main Web 3.0 operational models.

2.2 Centralized Finance (CeFi)

As defined by the Financial Stability Board (FSB), CeFi involves centralized intermediaries to offer virtual asset finance services (Financial Stability Board, 2023). These intermediaries combine features from both DeFi and TradFi. On the one hand, they offer Web 3.0 financial services such as spot trading, order matching, and asset management – similar to what DeFi platforms provide. On the other hand, they operate through centralized structures and offer user-friendly interfaces, much like traditional financial institutions.

 The significance of CeFi is that these CeFi institutions usually have legal status and physical presence while offering virtual assets finance services, which makes them easier for governments and regulators to monitor. Regulators can oversee them to ensure they follow legal requirements, protect investors’ rights, and maintain market stability. As a result, CeFi services are often the primary focus of Web 3.0 regulatory frameworks in major financial markets such as the United States, Singapore, the European Union, and Hong Kong.

2.3 Integration of Traditional Finance and Centralized Finance (TradFi-CeFi)

Traditional financial institutions such as commercial banks, investment banks, and mutual funds are also actively entering the Web 3.0 field by developing financial products in partnership with licensed CeFi providers. These products are known as TradFi-CeFi products, which generally fall into two categories. The first type is issued within traditional financial markets but has its value linked to Web 3.0 assets, such as cryptocurrency ETFs. Meanwhile, the second type uses traditional financial valuation models but is issued on blockchain platforms, including Tokenized green bonds or stablecoins. Although these cross-market products operate across both traditional and Web 3.0 systems, they tend to have lower transparency and slower transaction speeds compared to standalone DeFi or CeFi solutions. Nevertheless, they allow traditional financial products to benefit from Web 3.0 technologies, helping to modernize the broader financial industry and drive the growth of the TradFi market.

2.4 Decentralized Finance (DeFi)

According to the definition of the Hong Kong Institute for Monetary and Financial Research (HKIMR), DeFi is a financial model that operates without any centralized intermediaries (Hong Kong Institute for Monetary and Financial Research, 2024). Instead, it uses blockchain technology and smart contracts to deliver financial services. Built on these smart contracts, DeFi platforms now offer a wide range of services, including lending, trading, staking, and derivatives.

DeFi has significant market potential. According to data from Statista, the number of DeFi users is expected to reach 213.23 million by 2026 (Statista, 2025). This rapid growth is driven by several factors. First, DeFi platforms often offer high returns, which attract users from traditional financial systems. Second, improvements in user interfaces and the availability of educational resources have made it easier for new users to learn how to use DeFi platforms. Third, DeFi can provide financial services to underserved populations who lack access to the traditional banking system, helping to expand financial inclusion (Financial Times, 2019).

Notably, one of the key features of DeFi is that it relies on smart contracts that are self-governed and maintained by Decentralized Autonomous Organizations (DAOs). These DAOs operate without any central authority or hierarchy, which creates a major challenge for regulators. Because there is no identifiable institution in charge, it becomes extremely difficult for authorities to hold anyone accountable for DeFi transactions. This lack of identifiable accountability means that DeFi systems often operate outside the scope of existing institutional regulatory policies, ultimately exposing the ecosystem to substantial risks.

Table 1.  Overview of Three Operation Models of Global Web 3.0 Financial Ecosystem

2.5 Feature Comparison of the Three Models

In the development of Web 3.0 financial services, three models, CeFi, DeFi, and TradFi-CeFi, each exhibit unique advantages and disadvantages. To better understand how they perform, we can compare them across several key areas: business scope, user-friendliness, transaction costs, difficulty of regulation, and customer information management.

a) Business Scope

Both CeFi and DeFi offer basic functions such as cryptocurrency exchange and transfer. Furthermore, CeFi and DeFi users can also access more complex financial services, including lending, staking, and even customized derivative contracts. CeFi platforms, however, tend to provide faster and more stable services than DeFi because they rely on centralized liquidity pools. This allows for smoother operations in areas like crypto-to-fiat conversion and cross-chain asset trading.

In the TradFi-CeFi model, however, such a service is not applicable. TradFi-CeFi clients either purchase products that are linked to Web 3.0 assets through traditional financial institutions or hold traditional financial products issued via blockchain smart contracts. In both cases, these assets are not settled within their native Web 3.0 environments, which, at the current stage, makes it difficult for users to directly use these products for further exchange, remittances, staking, or other financial services. As a result, the business scope of the TradFi-CeFi model remains limited.

b) User-Friendliness

Since CeFi and DeFi are relatively new fintech models, users often need time to learn how to navigate blockchain-based transactions. In this context, CeFi platforms tend to be more user-friendly because they offer well-designed interfaces, technical support, and customer service to assist users (Kerner, 2023). By contrast, DeFi platforms usually require users to read technical documentation and tutorials on their own, which can be challenging for beginners.

TradFi-CeFi products, however, are often linked to familiar offerings from traditional financial institutions or CeFi providers. This allows users to apply their existing knowledge of TradFi – for example, understanding fiat currencies – to grasp how CeFi products like stablecoins work. Additionally, since these products are issued by established institutions, users can access customer support more easily, making TradFi-CeFi services highly user-friendly.

c) Transaction Costs

CeFi service providers usually maintain private pools of Web 3.0 assets, which allows them to control transaction fees directly. As a result, transaction costs on CeFi platforms tend to be more stable. However, TradFi-CeFi models involve transferring value between traditional financial markets and blockchain markets. Since these transactions pass through multiple financial service layers, they often come with higher costs than the CeFi services.

DeFi systems, by contrast, have more volatile transaction costs. For example, Uniswap, a leading DeFi platform, uses public liquidity pools, and fees depend on market conditions and asset liquidity (Uniswap Docs, 2025). This makes it difficult to directly compare DeFi transaction costs with those of CeFi or TradFi-CeFi models.

d) Difficulty of Regulation

Products in the TradFi-CeFi model often resemble traditional financial instruments, such as cryptocurrency ETFs and Tokenized bonds. Because these products share similar structures and pricing models with their conventional counterparts (e.g. traditional ETFs and bonds), regulators can adapt the existing financial regulations and make some minor modifications to oversee them effectively.

In comparison, although CeFi service providers operate under entirely new business models, their legal identity and physical presence make regulation feasible. Regulators still need to invest more effort into designing appropriate oversight mechanisms tailored to their operations.

DeFi ecosystems, on the other hand, present a much greater challenge. They are governed by DAOs, which are anonymous and lack a centralized structure. This makes it extremely difficult for regulators to track activities or hold any specific entity accountable. As a result, DeFi platforms often fall outside the scope of regulatory frameworks, exposing the system to significant risks.

e) Customer Information Management

Providers of TradFi-CeFi and CeFi services are required to conduct due diligence on customer information in accordance with anti-money laundering (AML) and Know Your Customer (KYC) provisions issued by local governments. When necessary, providers of TradFi-CeFi and CeFi services will be able to track the activities of users who have completed real-name verification.

However, some users may prefer to keep their financial activities private. These users often turn to DeFi platforms, which enable users to keep anonymous when trading with virtual assets. While this protects user privacy, it also makes it harder for governments to detect and stop illegal activities like money laundering (OSL Group, 2025a).

Table 2.  Feature Comparison of Web 3.0 Models

3. Development of Web 3.0 in Hong Kong

Looking back on the current state of Web 3.0 development in Hong Kong, we can find that the Hong Kong Government has taken active steps to support the growth of the local Web 3.0 ecosystem. By leveraging four key strengths – its strong financial environment, abundant human capital, robust regulatory framework, and supportive policies – Hong Kong is well-positioned for significant progress in this area. These pillars highlight Hong Kong’s achievements in Web 3.0 development so far and will be discussed below.

 3.1 Financial Environment

First, as a top-tier international financial center, Hong Kong offers a well-established ecosystem for global financial investments. According to the Global Financial Centres Index (GFCI), Hong Kong ranks third among global financial centers. Specifically, it holds the top position in key areas, including the business environment, infrastructure, and reputation (Wardle & Mainelli, 2025). This strong foundation creates fertile ground for fintech innovations, including those related to Web 3.0 development.

3.2 Human Capital Resources

Hong Kong offers strength in both new talent and professionals in Web 3.0. According to Coindesk’s global ranking of blockchain universities, five Hong Kong-based universities are among the top 50 worldwide. Impressively, the Hong Kong Polytechnic University ranks as 1st in this list, demonstrating its outstanding capability in Web 3.0 education (Kim, 2022). This flourishing educational ecosystem not only provides a solid theoretical foundation but also offers hands-on training opportunities. It is evident that Hong Kong has a vibrant blockchain education community, which is capable of nurturing local talent for the Web 3.0 sector. In addition to offering strong resources for developing new Web 3.0 talent, Hong Kong also attracts skilled professionals from around the world. The Hong Kong Government actively supports global talent recruitment through its Talent List program, through which professionals with Web 3.0 expertise, including blockchain and distributed ledger technology, can apply for certification and enjoy immigration benefits (Talent List Hong Kong, 2025).

3.3 Regulatory Framework

The Hong Kong government has introduced a comprehensive regulatory framework to oversee institutions offering key CeFi and TradFi-CeFi services. In August 2025, the Hong Kong Monetary Authority (HKMA) introduced the Stablecoin Ordinance (Hong Kong Monetary Authority, 2025). This move supports the development of Hong Kong dollar-backed stablecoins, marking an important step toward advancing TradFi-CeFi integration in Hong Kong.

The Securities and Futures Commission of Hong Kong (HKSFC) released a licensing policy for virtual asset trading platforms (VATPs) in 2023. This policy acts as a guidebook for centralized Web3.0 asset exchanges, the main players in CeFi services, to ensure their transparent and compliant cryptocurrency trading practices (Securities and Futures Commission, 2025). As of October 2025, 11 CeFi institutions have obtained such licenses, allowing them to provide regulated cryptocurrency exchange services.​

Moreover, the framework also includes rules for financial intermediaries engaged in TradFi-CeFi activities, such as managing virtual asset funds, offering investment advice, and distributing virtual asset-related products (Securities and Futures Commission, 2023a). These regulations enable traditional financial institutions to leverage their existing customer bases and legally offer Web 3.0 products and services.

3.4  Policy Support

The Hong Kong authorities have shown strong commitments to developing the Web 3.0 ecosystem. The Chief Executive, finance-related government departments, and the Legislative Council have all expressed strong support and introduced a series of measures to promote this sector.

In his 2025 Policy Address, the Chief Executive John Lee Ka-chiu proposed further promotion of the Tokenized asset market and the creation of a stable regulatory system for issuing Hong Kong dollar-backed stablecoins (Lee, 2025). Additionally, the Policy Statement 2.0 on Development of Virtual Assets in Hong Kong, released in 2025, outlined specific initiatives to support Web 3.0 development: regulation streamlining, development of Tokenized asset products, advancing use cases and collaboration, and talent sources and knowledge sharing (Financial Services and the Treasury Bureau, 2022). Furthermore, the Legislative Council also plays an active role in these initiatives. Its Subcommittee on Issues Relating to the Development of Web3 and Virtual Assets monitors progress and ensures that relevant authorities implement these measures effectively.

3.5 Achievements in Web 3.0 Development

Leveraging its four core strengths, Hong Kong’s Web 3.0 industry has witnessed remarkable growth. According to Chainalysis’ statistical charts, Hong Kong received approximately US$800 billion in cryptocurrency inflows between July 2023 and June 2024, ranking second among East Asian regions. Additionally, the cryptocurrency adoption index of Hong Kong surged by 85.6% year-on-year in June 2024, which is the highest growth rate in East Asia (Chainalysis, 2024). Furthermore, a research report from Multipolar reveals that Hong Kong’s per capita virtual asset holdings reached US$97,531, placing it third globally (Multipolitan, 2025).

Beyond cryptocurrencies, other virtual assets based on the TradFi-CeFi model and related products in traditional financial markets have also flourished in the Hong Kong market. Hong Kong is now the largest market for virtual asset-based exchange-traded products in the Asia-Pacific region, with assets under management reaching HK$8.1 billion by September 2025 (Huang, 2025).

These achievements clearly position Hong Kong as a global leader in Web 3.0 development. However, to fully unlock its potential, additional policy support will be essential to sustain growth and drive innovation.

4. Policy Suggestions for Web 3.0 Development in Hong Kong

Figure 1.  Summary of Suggestions for Hong Kong Web 3.0 Development

Philippe Aghion and Peter Howitt, the 2025 Nobel laureates in Economics, argued in their work on “creative destruction” that new technologies often disrupt existing product markets (Aghion & Howitt, 1992). The Web 3.0 ecosystem stands as a prime example of such disruption for the traditional financial industry. To maximize social welfare across both sectors, policymakers should not only promote Web 3.0 development but also empower TradFi during this transition.

Against this backdrop, Hong Kong could adopt a two-pronged approach. One focus area is to use the CeFi model to guide the future development of Web 3.0 and explore new, untapped markets. Concurrently, Hong Kong could leverage the TradFi-CeFi model to build a bridge between TradFi and Web 3.0, enabling existing financial products to benefit from innovative technologies.

In the following sections, we present detailed recommendations based on the characteristics of these Web 3.0 operational models.

4.1 Suggestions for CeFi Development

a) Establish a Tailored Auditing Framework for CeFi Institutions

Auditing CeFi institutions is a crucial aspect of maintaining financial stability within the CeFi industry. Recognizing its importance, the Hong Kong government has placed strong emphasis on this area. According to the “Guidelines for Virtual Asset Trading Platform Operators” issued by the HKSFC, CeFi institutions are required to conduct regular audits to monitor and control their financial risks effectively (Securities and Futures Commission, 2023b).

Beyond being subject to government pressure, several leading local CeFi institutions, such as OSL, are already listed on the Hong Kong Stock Exchange. As public companies, they are obligated to disclose their operational and financial information. According to OSL’s 2024 annual report, virtual assets make up around 45% of its total assets and are measured either as “inventory” or “intangible assets” (OSL Group, 2025b).

However, the Hong Kong Institute of Certified Public Accountants (HKICPA) has pointed out that both existing accounting approaches – treating virtual assets as inventory or intangible assets – have notable limitations (Li & Wang, 2021). These methods do not fully reflect the real market value or the risks associated with virtual assets. Therefore, we recommend that regulators accelerate the development of a tailored auditing framework designed specifically for CeFi institutions. Such a framework would enable auditors to evaluate asset values and related risks more accurately, ultimately strengthening the stability of the Web 3.0 financial market.

b) Local Web 3.0 Talent Certification System

The shortage of Web 3.0 talent has been a major challenge for businesses in Hong Kong. In his speech at the Hong Kong Web3 Festival, legislator Johnny Ng Kit-Chong noted that while the Web 3.0 industry possesses abundant resources and creative ideas, it faces a severe shortage of skilled professionals (Lian, 2025). For many companies, this talent gap has become a major obstacle to growth. A report titled “Hong Kong Web3 Blueprint: Building a Web3 International Finance Hub” by Web3 Harbour and PwC reinforces this view, stating plainly that “the lack of talent availability is the current state of Hong Kong Web 3.0 Industry” (Web3 Harbour & PwC., 2025).

Although major universities and training institutions in Hong Kong offer Web 3.0-related courses, these programs face two major problems. First, there is a lack of standardization in course design, leading to substantial discrepancies in teaching content across different institutions. Second, due to the rapid iteration of blockchain technology, course curricula often fail to keep up with the latest industrial requirements. These two issues collectively result in capability fragmentation among job seekers: some candidates may demonstrate expertise in specific Web 3.0 technical domains but lack proficiency in other critical skills demanded by the industry. This imbalance makes it challenging for enterprises to quickly evaluate whether candidates meet practical job requirements through traditional recruitment processes. Consequently, enterprises are compelled to invest significant resources in post-hiring internal training, which substantially increases their labor costs.

To address the above challenges, we suggest that the authorities establish a standardized local Web 3.0 talent certificate framework. Specifically, the government should take the lead in introducing an officially recognized “Web 3.0 Practitioner Certification” system with clearly formulated and quantifiable skill assessment criteria. This system would help companies quickly verify candidates’ qualifications and reduce recruitment costs, and it would ensure that talent development aligns with industry needs, improving the efficiency of Hong Kong’s Web 3.0 talent pool.

c) Introducing Global Leading CeFi Institutions

As of November 2025, leading local cryptocurrency exchanges in Hong Kong have already been providing trading services for major cryptocurrencies such as Bitcoin, Ethereum, and CRP. For example, HashKey has claimed support for 19 cryptocurrencies in Hong Kong (HashKey, 2025). However, this level of coverage is still relatively small compared with international leaders like Coinbase, and it is not enough for local cryptocurrency exchanges to take advantage in global market competition. According to disclosures from Coinbase, it now supports trading for more than 275 different virtual assets and 340 trading pairs (Coinbase, 2025).

Yet, internationally leading CeFi institutions such as Binance and Coinbase have not yet established compliant business branches in Hong Kong, so they do not directly compete with local exchanges. In this context, compared with their counterparts in other global markets, Hong Kong’s local centralized financial institutions face lower competitive pressure, offer a narrower range of virtual-asset services, and have relatively limited potential for international competitiveness.

To address this, we recommend that Hong Kong authorities actively attract internationally recognized CeFi institutions to enter the local market. Introducing these global leaders would create a “catfish effect,” encouraging local firms to improve their competitiveness and strengthen their core capabilities. In the long run, this approach would help Hong Kong-based CeFi institutions build a solid foundation to compete successfully on the global stage.

4.2 Suggestions for TradFi-CeFi Development

a) Upgrading Audit Frameworks for Traditional Enterprises

Hong Kong authorities should not only establish auditing rules tailored for CeFi institutions but also update the existing audit standards for traditional enterprises, as many of them are beginning to hold virtual assets. As virtual asset trading expands in Hong Kong, more institutional clients are participating. Licensed platforms like OSL now offer staking services, allowing institutional clients to earn returns by holding digital currencies and verifying blockchain transactions (OSL Group, 2025c). Moreover, the Hong Kong government is actively developing various Web 3.0 financial products, including stablecoins and Tokenized securities. As more of these products become available to institutional clients, it is foreseeable that Web 3.0 assets will make up a much larger part of Hong Kong companies’ total assets in the future.

Since Web 3.0 assets are significantly different from traditional financial products in valuation and risk management, authorities and accounting institutions could work together to improve Hong Kong’s audit system. Such refinement would enable the audit system to more systematically identify the value and potential risks of enterprises’ Web 3.0-related assets, thereby strengthening the transparency and resilience of Hong Kong’s financial ecosystem and safeguarding long-term financial stability.

b) Upskilling TradFi Professionals for Web 3.0 Development

For the development of TradFi-CeFi, enterprises and the government do not need to create an entirely new talent pool. Instead, they could build on Hong Kong’s existing TradFi education infrastructure. By equipping finance professionals with Web 3.0 knowledge, these individuals can transition smoothly into the Web 3.0 domain.​

For example, fund managers who oversee virtual asset ETFs can be trained by experienced traditional ETF managers. These professionals already understand ETF operations, trading strategies, and risk management. Once they learn the features of Web 3.0 assets and blockchain transaction mechanisms, they will be well-prepared to manage virtual asset ETFs effectively.

Regulatory authorities who encourage TradFi practitioners to actively engage in Web 3.0 education and training programs are recommended. Notably, the Hong Kong government has already begun the process to promote such initiatives. The HKMA, in collaboration with the FSTB, has launched the Training Subsidy for Fintech Practitioners through the Hong Kong Institute of Bankers (HKIB), providing financial support for banking professionals to study blockchain, distributed ledger, and Web 3.0–related subjects (Hong Kong Monetary Authority, 2024).

This initiative not only enhances the technical capabilities of TradFi professionals, helping them remain competitive in a rapidly evolving financial ecosystem, but also builds a high-caliber talent pool for the future development of the TradFi–CeFi sector. Therefore, we suggest that the government further expand such programs beyond the banking industry to include professionals in investment banking, asset management, and other financial sectors, thereby fostering a more comprehensive Web 3.0 talent ecosystem.

4.3 Suggestions for DeFi

In the previous analysis, we highlighted the regulatory challenges and substantial risks inherent in DeFi systems. DeFi platforms lack a physical presence in traditional financial structures – there is no centralized management, physical offices, or dedicated servers. These characteristics make it extremely difficult for regulators to enforce effective oversight.​

The decentralized structure of DeFi also means that many platforms do not have dedicated technical maintenance teams. This absence can leave smart contracts and underlying protocols vulnerable to security flaws, making DeFi platforms particularly attractive targets for hackers (Federal Bureau of Investigation, 2022). These attacks not only harm individual investors but also undermine the stability of the broader financial market. Additionally, the anonymous and decentralized nature of DeFi is frequently abused by criminals for illegal activities such as money laundering and illicit fund transfers, exacerbating the risk of financial crime (U.S. Department of the Treasury, 2023). For these reasons, we advise the Hong Kong government against introducing DeFi-related entities and products into the local market to safeguard local financial stability.

However, monitoring the development of DeFi platforms is necessary. Particular attention should be paid to business model innovations and advancements in the DeFi systems. When major breakthroughs or new financial models emerge in DeFi systems, comprehensive evaluations should be conducted to determine whether these innovations can be adapted and integrated into CeFi or TradFi-CeFi ecosystems, creating new growth opportunities for Hong Kong’s Web 3.0 sector.

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