Author | Yu Jianing, the original President of Huobi University and the Founder of Uweb (University of Web3)

Translate | WuBlockchain

Original link：

https://twitter.com/Web3DrJN/status/1677209705947758595

1、About the SEC lawsuits against Coinbase and Binance, is this the final bad news?

These two lawsuits don’t constitute a bearish scenario in the industry fundamentals. Restrictive policies only temporarily affect market sentiment, and regulatory measures arise from chaos, there’s no such thing as a last time. The market moves forward after consolidating its base post a correction.

Regarding digital asset regulation, the US has always been a global benchmark. Following Hong Kong’s adoption of Web3 policy, it appears to have influenced the pace of regulation within the US. As the US election year approaches, it’s difficult to see a short-term resolution of divergent regulatory bodies;

For the SEC’s law enforcement action, I am more focused on Coinbase’s and SEC’s Law is Law’s battle. A long-term market is not afraid of regulation, but is afraid of regulatory inaction;

In a globally gloomy macroeconomic context, if the US, as the largest source of funds, is cut off or somewhat cut off, it will lead to issues on the ingress of new funds and the ways to enter the industry. Recently, Binance’s withdrawal from the Netherlands is a point of concern, and it may become a law enforcement template for other countries, which may cause problems in buying coins;

The SEC and Binance have reached a consensus on some matters. The starting point of US regulation is to constrain and limit potential risks with the century-old traditional financial regulatory framework, similar to Hong Kong, all aimed at protecting investors;

2、 When will the next bull market be triggered?

I don’t believe the bull market will come immediately, but we are currently in the later stage of the bear market. The industry has vast opportunities, and without adjustment or decline, where will opportunities come from?

I personally subscribe to the “Digital Asset Clock” theory, which breaks the cycle into four phases: market warming (recovery period), capital influx (overheating period), market crash (stagnation period), and innovation wave (recession period). The current phase is apparent;

Protect your chips. As long as you survive, profound adjustments are beneficial. How can ordinary people participate when industry giants dominate? Regardless of whether the elephants are fighting or the industry is adjusting, we are the grass that needs to avoid being suppressed and killed;

Short-term bull, long-term bear, is the current feature of the crypto market, but with each bull cycle, our prediction is that it will exceed the last peak;

The narrative of BTC halving in 2024 and 2025, if not unexpectedly, will once again become the engine of the bull market as usual;

3、 Hong Kong’s Pilot Program and the “West Declines, East Rises” Theory

The SEC lawsuits against Coinbase and Binance are a climax in the “West Declines, East Rises” stage. The power play between regional regulatory authorities has an intriguing effect, but in the context of globalization and digitization, the forces of competition and complementation between regions have driven changes in the market and policies, further highlighting the strategic significance of Hong Kong’s pilot program.

With the fall of FTX, Hong Kong announced favorable Web3.0 policies in November last year, ushering in the “West Declines, East Rises” phase for the cryptocurrency market. Businesses in the US engaged in institutional digital asset operations have started considering or are already exiting the US due to increased regulatory costs. A Hong Kong legislator has extended an olive branch to Coinbase’s CEO;

In the process of “West Declines, East Rises”, Singapore and Hong Kong are different. Singapore is more open, absorbing a large amount of early traffic and Chinese-speaking teams. PSA and DPT are quite mature. External factors, such as the Occupy Central event, have also benefitted Singapore’s economic resources;

Backed by the mainland and connected to the Chinese market, Hong Kong, despite support from the mainland, will still face challenges such as uncertainty in the regulatory environment and alignment with international standards;

4、 Hong Kong’s greatest advantage — creating a nurturing ground for billion-level applications

Hong Kong’s ecosystem is built around regulatory transparency, efficient capital and professional talent.

China’s exploration in Hong Kong might be the beginning of a new chapter in the legal and regulatory environment.

Both Hong Kong and Mainland China, being significant regions for technology and innovation, possess the potential for the development of Web3 and Metaverse technologies. Policy support, technological talent, and market demand could make Hong Kong and Mainland China ideal incubators and promoters for these companies. Strengthening cross-border cooperation and building an open ecosystem will also provide more opportunities and support for the development of Web3 companies.

Hong Kong’s opportunity lies in resource integration. Within the scope of legal permission, the efficiency of commercial transformation of resources can be increased. This is Hong Kong’s biggest advantage and could potentially be its best opportunity.

The transaction scenarios promoted by the Hong Kong government are large application scenarios. Transactions and circulation are the basis of digital assets. The value of liquid assets supports the market. User numbers and transaction volumes are dimensions to evaluate application success. After successful validation of assets, more types of assets will be expanded, adding points to the former.

Hong Kong has already prepared for this ecological construction in terms of infrastructure, including the most important legal framework, market access, and market theme qualification recognition, as well as the regulatory principle of “equal risk, equal supervision”. Currently, it is advancing communication with traditional financial infrastructure such as traditional banks. The maturity of the secondary market will also promote the professionalism of talent.

Our new company also chose to register in the Hong Kong Cyberport. Without a doubt, we saw a lot of policies in Hong Kong that are beneficial for WEB3. The reasons for these policies include the fact that the role of finance is no longer purely financial, as more and more geopolitical factors are mixed in, and major power conflicts make the previously trusted international financial system increasingly unreliable.

The so-called construction of an international financial center in Hong Kong is not a logic of cost reduction and efficiency increase. The new international financial center emphasizes stability, sustainability, and security. Recent major events, such as the dual counter trading of RMB and HKD launched by the Hong Kong Stock Exchange, imply that the financial attributes of the RMB are becoming stronger. Offshore RMB will not only be used for trade/payments but also enhance investment attributes.

Hong Kong’s development of virtual assets and WEB3 is a proactive behavior facing future uncertainties. In the complex and changing international situation, what does Hong Kong need to rely on to ensure its position in a new financial system? It cannot simply rely on the US dollar and offshore RMB. In the fast iteration of the financial system, we need to have Plan B and Plan C. I believe that Hong Kong’s Plan C is virtual assets.

Although virtual assets may not have fully integrated into the mainstream, they have a global consensus foundation and are widely accepted by various countries around the world. Developing virtual assets, through continuous supervision and compliance, allows virtual assets to be incorporated into the mainstream, can be combined with traditional businesses of these financial institutions, and can enable Hong Kong to play a more important role in the global new financial system.

Hong Kong’s virtual asset-related businesses are not only conducted by some start-up companies. Very traditional institutions, including digital Hong Kong dollars, companies from Bank of China/ICBC/CCB in Hong Kong have also participated. China Mobile Hong Kong/China Mobile International/COSCO, Hong Kong University of Science and Technology, and others have also participated in the establishment of the WEB3 Association.

In summary, the current wave in Hong Kong is not only beneficial to Hong Kong but also to the country. It allows our country to have a good external circulation system in the future’s complex and changing situation and to continue to find its foothold in the global financial system.

Please feel free to correct and criticize the above views.

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