Review of Compliance Development in China's Web3.0 Industry in 2024

As 2024 comes to a close, it's time to review the development of the Web3.0 industry in China over the past year. Compliance has been the main theme of the industry's development, from the improvement of regulatory systems to enterprises exploring new financing models, and the expansion of digital currency applications. The interaction between policy and market is driving the industry towards a more standardized direction.

Hong Kong Becomes the Asian Web3.0 Hub

In 2024, Hong Kong's regulatory openness in the Web3 field became an important milestone. The policy framework centered around the Virtual Asset Service Provider (VASP) license not only provides clear regulatory guidance for the Chinese market but also attracts global capital and business attention, gradually establishing Hong Kong's status as a cryptocurrency hub in Asia.

Multiple virtual asset trading platforms have been approved to open trading to retail investors in Hong Kong, marking the increasing maturity of the compliance system in the Hong Kong virtual asset market. Regulators have also formulated specific rules for sub-sectors such as stablecoin issuance, custody services, and over-the-counter trading, further enhancing the security and transparency of the market.

These measures have not only enhanced the credibility of Hong Kong's digital asset market but also attracted a large amount of capital and enterprises. As of November, Hong Kong's Cyberport has gathered over 270 Web3.0-related companies, with cumulative financing exceeding 400 million HKD. The Bitcoin spot ETF launched in the first half of the year has also attracted nearly 500 million USD in net inflows.

Hong Kong is also actively hosting various Web3 events, such as the Hong Kong FinTech Week held in October, which attracted over 500 exhibitors and tens of thousands of attendees. Current Web3 projects in Hong Kong include the Ensemble Sandbox Program and the e-HKD+ program. As Asia's Web3 hub, Hong Kong is gradually opening up a compliant virtual asset market through policy guidance and market-driven initiatives.

The Mainland Judicial System Clarifies the Positioning of Virtual Currency

In 2024, the judicial system in mainland China further clarified its regulatory stance and legal application principles regarding virtual currencies. Courts across various regions defined legal boundaries for the circulation and use of virtual currencies in accordance with relevant policy spirit, while gradually recognizing their economic value in property disputes.

In judicial practice, courts generally emphasize that virtual currencies must not be used as financing, payment, or trading tools. For example, the Shenzhen court ruled that paying wages with virtual currency is an invalid act, and the Xiangyin court determined that using virtual currency to settle debts is invalid. These cases further reinforce the positioning of virtual currency as "prohibited from circulation" under the mainland legal framework.

However, in terms of property rights protection, the judicial system has also shown a certain degree of flexibility. The Shanghai High People's Court explicitly recognized the property attributes of virtual currency in a financing contract dispute case, which can be protected by law. In addition, in several theft cases involving cryptocurrencies, judges qualified the crimes as property theft rather than illegal acquisition of computer data, reflecting the recognition of the property attributes of virtual currency in judicial practice.

These cases not only provide clearer judicial bases for the legal application of virtual currencies, but also emphasize their circulation restrictions and investment risks.

Blockchain technology accelerates implementation

In stark contrast to the regulation of virtual currencies, mainland China maintains a positive supportive attitude towards blockchain technology and its applications. The broad application of blockchain technology was listed as a key topic at the National Committee of the Chinese People's Political Consultative Conference in March this year, proposing to strengthen basic research, enhance independent innovation capabilities, and support its application in key fields such as finance, logistics, and energy.

Local governments have successively introduced support policies. For example, the Hangzhou Municipal Bureau of Commerce has formulated an action plan to promote the development of a strong digital trade city, guiding the development of new business formats such as the metaverse, digital twins, and digital collectibles; the Shandong Provincial Department of Industry and Information Technology has released an action plan for blockchain technology innovation and industrial development, encouraging the integration of blockchain, big data, metaverse, and other technologies to develop new cultural and creative products such as digital intangible cultural heritage and digital collectibles.

The promotion of the digital renminbi (e-CNY) continues to accelerate, especially making breakthroughs in the fields of cross-border payments and wholesale settlement. The Shanghai municipal government has released a plan to promote high-level opening of the free trade zone, proposing an orderly advancement of the digital renminbi pilot; in November, Shanghai held a deployment meeting for the pilot application of the digital renminbi and formulated a new round of action plans. The pilot scope of the digital renminbi in Hong Kong and Macau has been further expanded, and the scale of cross-border transactions is steadily increasing.

These policy supports not only promote the construction of digital financial infrastructure but also provide new compliance development paths for the Web3.0 ecosystem, laying the foundation for the digital upgrade of the domestic market and international competitiveness.

RWA Becomes a New Model for Cross-Border Financing for Enterprises

In 2024, the tokenization of real-world assets (RWA) gradually moves from concept to implementation, becoming one of the core trends in the Web3.0 industry. Chinese companies are starting to explore compliant cross-border financing models, providing new solutions for the integration of traditional assets and the digital economy.

In August, a blockchain company collaborated with a renewable energy enterprise to launch the charging pile RWA project, successfully completing a financing of 100 million RMB, opening a new path for the integration of traditional assets and the digital economy. In October, at the Hong Kong FinTech Week, the "Two Chains and One Bridge" cross-border platform for RWA infrastructure was launched, focusing on the tokenization of traditional assets such as real estate, bills, and supply chain finance, promoting the standardization and compliance construction of cross-border asset circulation.

In terms of policy, Hong Kong is taking the lead in exploring the compliance path for RWA. Multiple initiatives such as the e-HKD pilot project and the Ensemble sandbox program are gradually improving compliance standards in the RWA industry, providing security for cross-border transactions. Although mainland China has not yet introduced specific policies targeting RWA, it has laid the foundation in blockchain technology and digital financial infrastructure construction, creating conditions for mainland enterprises to participate in this trend through offshore markets.

Enterprises Explore New Paths for Compliance Participation

In 2024, against the backdrop of the rapid development of the global Web3.0 industry and facing a strict regulatory environment domestically, Chinese companies are beginning to shift their focus to Hong Kong and even overseas markets, exploring new paths for compliant participation. With its open policies, mature regulatory system, and cultural affinity, Hong Kong has become the most attractive choice. At the same time, regions like Malta in Europe, Thailand in Asia, and the UAE in the Middle East, due to their flexible financial policies and open digital economy environment, have also become important options for Chinese enterprises to layout Web3.0.

However, going overseas is not about evading regulation, but rather requires companies to pay more attention to compliance requirements. From building legal structures to cross-border capital flows, companies need to ensure that they achieve global operations within a legal framework. For example, flexibly utilizing tools such as offshore funds and digital asset custody platforms within the scope of permitted policies, gradually exploring feasible paths to participate in the digital economy.

Summary

In 2024, China's Web3.0 industry is gradually showing a trend of compliance amidst policy adjustments and market innovations. From the leading role of Hong Kong's VASP licensing system to the pilot exploration of RWA cross-border asset management platforms, and the efforts of enterprises to explore overseas markets, these keywords not only outline the contours of China's Web3.0 compliance development but also provide a reference for the further evolution of future policies.

For enterprises, compliance is the fundamental prerequisite for embracing the Web3.0 market, while cross-border layout, technological innovation, and policy communication are key breakthroughs. In the context of accelerating global competition, how to flexibly layout within the compliance framework and seize market opportunities will become a core issue that Chinese enterprises must address.