1 Introduction

1.1 Web 3.0 refers to the third-generation Internet that belongs to the latest generation of World Wide Web (World Wide Web), which marks a decentralized and more open network world, creating more possibilities for users. The basis for promoting the development of Web 3.0 is a series of advanced technologies and related applications, including blockchain technology, smart contracts, virtual assets (such as cryptocurrencies), non-fungible tokens (NFT for short) and Metaverse ( metaverse) technology. These technologies/applications provide the required infrastructure for the decentralized network at the technical, financial and other major levels, allowing users to interact directly without going through any intermediary platform. Compared with Web 2.0, Web 3.0 is undoubtedly a big leap forward, because the world of Web 2.0 is dominated by a few technology giants, and transactions need to be conducted through intermediary platforms (such as shopping websites and banks).

1.2 The Hong Kong government is committed to promoting the development and application of Web 3.0. In the 2023-2024 budget, the Financial Secretary announced that he will accelerate the construction of the Web 3.0 ecosystem in Hong Kong, and establish a dedicated development team. However, there are still concerns that the development of local Web 3.0 lags behind other places, because many places around the world, especially Asia and the Gulf region (Gulf region), have launched a number of measures to accelerate the development of Web 3.0 and related technologies/applications. In addition, given the recent turmoil in the cryptocurrency market, there are opinions that Hong Kong should not only focus on financial services and virtual assets, but also actively promote innovation in other Web 3.0 technology fields, including blockchain and Metaverse technology.

1.3 At the request of the Honorable Ng Kit-chung, the Research Team has developed

Research on the leading places of Web 3.0 technologies/applications, and explore the strategies they adopt for this purpose. This study will focus on the experience of Japan, Singapore, South Korea and the United Arab Emirates (“UAE”), as these places have been active in developing Web 3.0 technologies and have become global or regional innovation hubs. Among them, Japan has provided high-level policy guidance on the development of Web 3.0, and established a dedicated office to strengthen the coordination of Web 3.0 policies among various government departments. Unlike Japan, which has a comprehensive strategy to lead the development of Web 3.0, other places covered in the study focus on the development of one or more specific areas of Web 3.0, such as Singapore and the United Arab Emirates, through cooperation with the industry and/or the establishment of incubator centers , actively exploring the application and practice of blockchain technology; South Korea is actively launching the metaverse strategy to stimulate innovation in multiple fields such as public services, culture, and tourism.

1.4 This fact sheet first discusses the main features, underlying technologies and applications of Web 3.0, and then provides an overview of the recent development of Web 3.0 in Hong Kong. This article then proceeds to analyze the development of Web 3.0 and related technologies/applications in selected places, which includes examining Japan's approach to developing a comprehensive strategy, and other research places to promote application-oriented initiatives, including (a) Singapore and the United Arab Emirates to develop blockchain technology and/or asset tokenization; and (b) Singapore, South Korea and the UAE to develop metaverse technologies.

2.Basic features of Web 3.0

2.1 Although the invention of the World Wide Web is hailed as one of the greatest technological breakthroughs in modern human history, the online world is still evolving. Until the mid-2010s, the concept of "Web 3.0" emerged, which described an Internet/cyberspace with the following characteristics, which is quite different from the previous first-generation and second-generation Internet: [The World Wide Web has experienced 3 main stages of development since the 1990s, For details, please refer to Appendix 2. ]

(a) Decentralized: The decentralized web is a core principle of Web 3.0. In the era of Web 3.0, the data created by users is distributed and stored in different places on the computer network through blockchain and other technologies, rather than being stored centrally in databases owned by large technology companies, so that users can better control their data and privacy and digital identity [see World Economic Forum (2022), Ejeke (2023) and Grant (2023) for details. ];

(b) Open and interoperable: Web 3.0 applications are usually developed by the developer community and written in open-source software, so that different systems and platforms can be used on the decentralized network Collaborate seamlessly on [see ibid. ]; and without permission (permissionless) and de-trust (trustless): anyone can participate in it, and there is no need to obtain permission from governing bodies such as service providers to act, so even without trusted third-party intermediaries such as banks and brokers, Users can still interact and transact with each other.

2.2 Web 3.0 implements the decentralized network world under the integration and development of many cutting-edge technologies, but there is no recognized standard definition for Web 3.0 so far. Figure 1 highlights the various disruptive technologies and applications that provide the basis for the development of Web 3.0, and the selected sites for this study are dedicated to the development of these technologies/applications.

3. The development of Web 3.0 technology in Hong Kong

3.1 Like many places in the world, Hong Kong is in the initial stage of Web 3.0 development, led by the government's formulation of policies to drive development. In the 2023-2024 Budget, the government emphasized that Hong Kong must seize the "golden opportunity" to develop Web 3.0. To this end, the government will allocate HK$50 million to accelerate the development of the Web 3.0 ecosystem. Relevant measures include holding large-scale international seminars to promote cross-sector business cooperation and organizing youth workshops. [See Budget (2023). ] In addition to confirming that virtual assets are an important part of the Web 3.0 ecosystem, the Budget also announced the establishment of a virtual asset development task force led by the Financial Secretary to bring together members from relevant policy bureaus, financial regulatory agencies and the industry. To submit proposals to the government on the development of virtual assets (see paragraphs 3.4 to 3.7 below for details of the development of virtual assets in Hong Kong to date).

3.2 In the early 2020s, Hong Kong has been particularly active in the development of Web 3.0. For example, the government completed four blockchain pilot projects in 2020, covering four areas including facilitating trademark transfers, optimizing the preparation procedures of environmental impact assessment reports, improving the traceability of pharmaceutical products, and monitoring company file records. , to explore the feasibility and benefits of blockchain technology applied to different e-government services. The government will further launch the Shared Blockchain Platform in June 2022, and will follow up with the development of more general services and reference program modules to assist various policy bureaus/departments in developing more blockchain applications. [See OGCIO (2022). ]

3.3 Cyberport, as the flagship organization of digital technology in Hong Kong and an important financial technology innovation center, also established the "Web3 Hub" in January 2023. In addition to providing support for local innovators, it also hopes to attract international Web 3.0 Enterprises settled in Hong Kong. [Cyberport is managed by Hong Kong Cyberport Management Co., Ltd., which is wholly owned by the Hong Kong government. Web 3.0 start-ups in Cyberport can be divided into three categories, namely financial technology, smart living and digital entertainment/e-sports. See Cyberport (2023). ] Cyberport’s current Web 3.0 start-up community has begun to take shape; as of late November 2022, a total of about 80 blockchain or virtual asset companies have entered Cyberport.

3.4 Given that Hong Kong is one of the world's international financial centers, the development of Web 3.0 in financial service-related fields is particularly vigorous. In October 2022, the government issued a policy manifesto setting out its vision and guidelines for promoting the "sustainable and responsible" development of the virtual asset industry. [See HKSAR Government (2022a). ] Due to the recent turmoil in the cryptocurrency market and the growing calls for better industry regulation around the world, the government especially hopes to strike a proper balance between supporting financial innovation, reducing risks and protecting investors.

3.5 Regarding the regulation of virtual assets, the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Regulations 2022 (“AML Regulations”) passed in December 2022 introduced a new licensing system for virtual asset exchanges , which provides that such exchanges are subject to the supervision of the Securities and Futures Commission (“SFC”). The new system has come into effect in June 2023, replacing the previous voluntary licensing system (opt-in regime) that did not require virtual asset exchanges to apply for licenses. The Anti-Money Laundering Ordinance stipulates that relevant operators must meet similar regulatory requirements as traditional financial institutions, including compliance with anti-money laundering/anti-terrorist financing, and other investor protection principles, such as safe custody of customer assets and avoidance of conflicts of interest. In addition, licensees are required to submit their audited accounts to the SFC on a regular basis, and the SFC also has the right to enter its business premises for inspection when necessary. [See HKSAR Government (2022b). ]

3.6 In January 2023, the Hong Kong Monetary Authority (“HKMA”) issued consultation conclusions on the regulation of stablecoins [HKMA proposes to establish a regulatory regime for stablecoins used as Relevant proposals put forward by the method include that stablecoins must be fully backed by relevant assets and can be redeemed at face value, and licensees must comply with regulations on ownership, governance, anti-money laundering/anti-terrorist financing, and information disclosure. See Hong Kong Monetary Authority (2023). ], and is preparing a regulatory framework for further public consultation this year. In addition, the SFC has finalized relevant rules and measures on how to allow retail investors to invest in virtual assets appropriately under the new licensing system, and how to protect investors. [Before this, the SFC consulted on this in early 2023 and concluded in May 2023 that retail investors could buy and sell "eligible large virtual assets" on licensed virtual asset exchanges. -cap virtual asset), which must be included in at least two "accepted indices" launched by at least two independent index providers. The SFC also announced that it will implement appropriate measures to enhance the protection of retail investors, including requiring relevant exchange operators to ensure suitability, compliance with token inclusion guidelines and other disclosure obligations in the process of establishing business relationships with customers. See Securities and Futures Commission (2023). ] The Securities Regulatory Commission will also approve the public offering of virtual asset futures exchange-traded funds in Hong Kong in October 2022. [See Securities and Futures Commission (2022). ] Due to the unique nature of virtual assets, which are different from traditional assets, the government is also open to reviewing the property rights of tokenized assets and the legality of smart contracts in the future, so as to provide a legal basis for related developments.

3.7 In addition to considering regulatory issues, the government has also launched pilot projects to promote innovative breakthroughs in digital and virtual assets in the financial sector; the government’s successful sale of the first batch of tokenized green bonds worth HK$800 million in February 2023 is one example. The purpose of the bond issuance plan is to test whether Hong Kong's financial and legal infrastructure can cooperate with DLT to handle the entire bond issuance cycle (that is, from issuance to settlement and redemption at maturity), and to provide a reference model for future bond issuance.

Concerns

3.8 Although the government has been committed to the development of Web 3.0 in recent years, the community still expresses concern that Hong Kong's development momentum is lagging behind others, especially when competitors inside and outside the region have stepped up their efforts to promote the application of Web 3.0 technology. In this regard, some comments urge the government to:

(a) Develop a blueprint for promoting the comprehensive development of Web 3.0, and focus on cultivating talents and start-ups. [See Ge Peifan (2023). ] In addition, there are also suggestions that the government should make strategic investments related to Web 3.0 technology through the newly established Hong Kong Investment Management Co., Ltd.[In the 2022 policy address, the government announced the establishment of Hong Kong Investment Management Co. reserve, and strategically promote local target industries and economic development. See also HKSAR Government (2022d). ];

(b) Actively explore various Web 3.0 technologies, such as blockchain-based applications (including DeFi and smart contracts), because in addition to virtual assets,

Web 3.0 also has broad application potential in other areas [see Dargan Chiu (2023) and Hong Kong Economic Journal (2023). ];

(c) Establish a clearer legal framework for the new trends brought about by Web 3.0 technology, including the emergence of DAO, intellectual property issues/concerns brought about by the use of NFT [Some analysts pointed out that legal cases that need to be clarified include: If a person only owns a certain part of the original work, how to determine whether the person is eligible to issue NFT; in addition, considering that artificial intelligence is created after human development and training, whether copyright should be granted to artificial intelligence. See China Daily (2022) and Now Finance (2022). ];and

(d) Learn from the experience of other places to catch up with the development of the metaverse, and explore the application of the metaverse in public services, tourism and other industries. [See Thinking about Hong Kong (2022) and HKSAR Government (2022e). ]

4. Development of Web 3.0 technologies in selected places

4.1 Policy makers around the world are increasingly aware of the potential of Web 3.0 and have successively promoted related technology development projects. The governments of the regions covered by this study have different approaches to promote Web 3.0 development. Among them, the government in Japan takes the lead in formulating a comprehensive Web 3.0 strategy at the policy level (see paragraphs 4.2 to 4.3 below), while other places such as Singapore , South Korea, and the United Arab Emirates, focus on developing one or more specific areas of Web 3.0, such as DLT/Blockchain (paragraphs 4.4 to 4.8) and metaverse technologies (paragraphs 4.9 to 4.15). The main features of different local development strategies are discussed in the following paragraphs.

Develop a comprehensive Web 3.0 policy

4.2 In Japan, there are more and more opinions in the society that the country should take Web 3.0 and related technologies/applications as the next development field, so that Japan can once again establish its status as an advanced technological power on the world stage. [See Liberal Democratic Party (2022). ], [ For example, Japan has always been a pioneer in the global virtual asset market and one of the first places to regulate cryptocurrencies. It has implemented a number of measures to strengthen investor protection and ensure the clarity of the regulatory framework. As far as the latter is concerned, the government introduced a registration system for encrypted asset trading service providers in 2017, and stipulated that service providers must store no less than 95% of the encrypted assets of customers offline in cold wallets (cold wallets) to Prevent hacking and fraudulent activity. See Financial Services Agency Japan (2022). ] The advanced features of Web 3.0 have become a key element in increasing productivity in Japan in particular [see Črešnar and Nedelko (2017). ], helping the country to overcome the challenges of a rapidly aging population and shrinking workforce to sustain economic growth. In fact, Japan’s ruling party, the Liberal Democratic Party, has set up a dedicated project team under its “Headquarters for the Promotion of a Digital Society” [a project team established in January 2022 to initially focus on issues related to NFT. Work. The group will then be restructured in October 2022 to become the Digital Society Promotion Council.

The Web3 project group under the Promotion Council; the association "is a government organization that promotes the construction of a digital society in Japan.], conducts research on the development of Web 3.0 technology as Japan's growth strategy. In April 2022, the group published "Japan's Web 3.0 Era NFT Strategy White Paper (White Paper on Japan's

NFT Strategy for the Web 3.0 Era, hereinafter referred to as the "White Paper"), puts forward a number of proposals for reforming policy and legal frameworks to cope with the evolving Web 3.0 economy.

The main proposals include [See Liberal Democratic Party (2022). ]:

(a) High-level policy guidance: The "White Paper" proposes to appoint a Minister (Minister) to deal with Web 3.0 issues, and to establish an inter-ministerial agency within the government to strengthen policy coordination and implement the national Web 3.0 development strategy;

(b) Educate the industry on NFT: Although Japan has a large amount of intellectual property content in games and animations, some content holders still have reservations about joining the NFT market because they are unclear about their rights as NFT holders. In this regard, the "White Paper" proposes to establish a common template of license terms, and to set up a consultation station and hold information seminars to respond to inquiries and concerns related to NFT ownership and intellectual property rights;

(c) Establish the legal status of DAO: In addition to confirming that DAO is a new governance model of the Web 3.0 ecosystem, the White Paper also urges the government to clarify the legal status of DAO, as well as the rights and responsibilities of its participants under Japanese law. The "White Paper" further recommends to follow the example of the state of Wyoming in the United States and allow DAOs to be legally registered in Japan; this state has allowed DAOs to operate locally in the form of a special limited liability company since 2021. Registration [Wyoming is the first state in the United States to grant legal personality to DAO by law and grant it extensive rights, including limited liability for DAO members. Relevant laws also impose additional requirements on DAOs, for example, they must have a registered agency in the state, and their registered name must include

"DAO LLC" and other words for identification. See State of Wyoming Legislature (2021). ];and

Talent attraction: In the context of global competition for Web 3.0 talents, the "White Paper" encourages the government to issue special visas (also known as crypto visas) to top talents proficient in Web 3.0 technologies, so as to attract more talents with relevant knowledge and skills to settle in Japan . The "White Paper" also recommends tax reforms, including reducing the tax rate on gains from encrypted asset transactions, in order to attract Web 3.0 companies and investors to settle down.

4.3 In addition, Japan has set up a dedicated Web 3.0 policy office (“dedicated office”) to shoulder the important task of improving the development of Web 3.0 and related business environment, which is one of the first cases in the world. The dedicated office established in July 2022 is under the Ministry of Economy, Trade and Industry. Agency for media content, sports and fashion. [See Ministry of Economy, Trade and Industry (2022). ] The first stage of work of the dedicated office is to collect information from relevant stakeholders such as business operators, investors and legal professionals, so as to understand the business challenges faced by the Web 3.0 industry. In addition to the establishment of a dedicated policy office, laws related to Web 3.0 are also expected to be submitted to Congress for consideration within 2023, with key points including the tax reform of encrypted assets and the legal status of DAO. [See Morrison Foerster (2023). ] The Japanese government has reportedly established its own DAO for the latter, in order to study the actual operation and role of DAOs in the Web 3.0 ecosystem, so that policymakers can better understand the benefits and challenges of granting DAOs legal status. [See CoinGeek (2022). ]

Explore the application of blockchain technology and/or asset tokenization

SingaporeFinancial Services Related Applications

4.4 As a regional and international financial center, Singapore is actively promoting the construction of an "innovative and responsible development" digital asset ecosystem [Singapore defines digital assets as: "any valuable asset whose ownership can be digitally or computerized. way to record". According to this definition, both financial assets (such as cash and bonds) and physical assets (such as property) can become digital assets after tokenization. See Monetary

Authority of Singapore (2022d). ], seeking to bring innovative projects to the financial services industry, rather than fueling speculative activity. [Singapore has been tightening regulations on crypto-assets, including restricting retail investors from buying and selling crypto-assets, and prohibiting the promotion of high-risk products to the public. In October 2022, the Monetary Authority of Singapore issued two consultation documents, suggesting (a) restricting retail investors from using credit instruments or leverage to buy cryptocurrencies; and (b) requiring retail investors to complete a risk awareness assessment before participating in trading. In addition, the authorities plan to impose restrictions on assets with a circulating value of more than SGD 5 million

(29 million Hong Kong dollars) and to regulate the issuance of stablecoins linked to a single currency. ] In this regard, Singapore sets its sights on fully harnessing the transformative potential of DLT and asset tokenization, and commits to vigorously promoting initiatives that bring innovation in related areas:

DLT

(a) To explore the potential of using DLT for cross-border payments and settlements, Temasek (Singapore's sovereign wealth fund) and two commercial banks formed a commercial joint venture to use a DLT-based multi-currency wholesale settlement and settlement platform, Reduce settlement times for Singapore dollar and US dollar transactions from days to minutes [see Monetary Authority of Singapore (2022d). ];

Asset Tokenization

(b) Another joint venture between Temasek and Singapore Exchange is exploring the application of tokenized assets in the capital market to speed up the settlement and settlement of securities transactions. The bond issuance platform built with blockchain technology not only digitizes manual procedures, but also achieves complete

A “paperless” process that shortens settlement times for new bond issues

60% to two days [see Singapore Exchange Group (2022). ];and

(c) In May 2022, the Monetary Authority of Singapore (“MAS”) will lead the use-case assessment of tokenized financial and real economy assets through the launch of Project Guardian. The Guardian Project is a cooperative project between the Monetary Authority of Singapore and traditional financial institutions and/or financial technology companies, aiming to test the feasibility of applications in four major areas: (a) Build an open and interoperable network through a public blockchain, It is used for digital asset transactions across platforms and liquidity pools; (b) use an independent trust anchor to verify the credentials of participants [the regulated financial institutions acting as trust anchors are responsible for conducting transactions for entities interested in participating in the DeFi protocol] Screen and issue verifiable credentials. This ensures that participants will only transact with verified parties, issuers, or protocol developers. See Monetary Authority

of Singapore (2022b, 2022c). ]; (c) promote asset tokenization; and (d) include regulatory safeguards in DeFi protocols to check and balance market manipulation. [DeFi protocols are the codes, procedures and rules that regulate how digital assets are used on the blockchain network. See Monetary Authority of Singapore (2022b, 2022c). ]

4.5 Specifically, the first industry pilot project of the Guardian program aims to explore

The application prospects of DeFi in the wholesale financing market, and the first real-time transaction has been completed in November 2022. The pilot successfully conducted real-time cross-currency transactions involving tokenized Japanese yen and Singapore dollar deposits, as well as buying and selling tokenized government bonds, proving Singapore’s ability to handle instant settlement and settlement directly between participants, and Implementation cost reduction effect. [See Monetary Authority of Singapore (2022a). ] Building on this experience, the Monetary Authority of Singapore is introducing two new industry pilots to expand the use of tokenized assets in areas such as trade finance and wealth management. [One of the pilot projects is to explore the issuance of tokens linked to trade finance assets, and the other is to work towards the local digital issuance of wealth management products. ]

UAE   government services and other applications

4.6 The UAE explores the wide application of Web 3.0 technology at multiple levels and takes a positive attitude. Relevant measures include: (a) adopting blockchain technology in applicable government services; (b) creating an ecosystem that is conducive to the development of start-ups and other enterprises, and Support the construction of the blockchain industry; and (c) establish an international leading position in blockchain technology. In 2018, the UAE launched the "Emirates Blockchain Strategy" (Emirates Blockchain Strategy) across the country ["The UAE Blockchain Strategy" covers 4 pillars, focusing on residential well-being, government efficiency, advanced legislation and global entrepreneurship. The strategy also sets an aggressive goal of moving 50 percent of government transactions to blockchain platforms by 2021. See Government of

UAE (2023a). ], in order to guide the work of promoting the application of blockchain, and the emirate of Dubai took the lead in launching the "Blockchain Strategy" (Blockchain Strategy) in 2016. [ There are 7 emirates in the United Arab Emirates, and Dubai is the most populous emirate. In order to develop into the hub of the global Web 3.0 and Metaverse, the Dubai government formulated the "Blockchain Strategy", and set government efficiency, industrial development and international leadership as the three pillars. ]

4.7 Since the UAE established a blockchain strategy at the national and emirate levels, about 200 related projects have emerged locally, involving more than 40 government agencies and 120 companies. [See World Economic Forum (2020). ] For example, the UAE’s Ministry of Health and Prevention has partnered with a local health tech company to launch a blockchain-powered platform since 2019 to improve organ matching and verification of donated organs, thereby eliminating Illegal organ trade, the platform is estimated to save the government more than US$20 million (HK$157 million) in dialysis treatment costs each year. [See ibid. ] As for another project launched by the Dubai Roads and Transport Authority (Dubai Roads and Transport Authority), the blockchain system is used to track the life cycle of vehicles (including sales and accident records), and to prevent fraud involving vehicles by improving information transparency. Transaction disputes. [See Government of UAE (2023a). ] In addition, in order to improve the speed of customs clearance for e-commerce, Dubai Customs has established a platform supported by blockchain technology to automate customs declaration procedures and tax-free application procedures for returns. It is reported that DHL and other major e-commerce companies is a user of the platform. [See World Customs Organization (2020). ]

4.8 Another important strategy of the UAE is attracting investment and attracting energy, focusing on cultivating and recruiting

Web 3.0 related startups. In order to discover more promising blockchain practical projects, the Dubai government held the global blockchain challenge program (global blockchain challenge) from 2017 to 2019, inviting 20 blockchain start-ups to showcase their innovative solutions every year. plan. In addition to receiving cash prizes, the winners will also have the opportunity to introduce venture capital and cooperate with government partners. [The 2019 challenge program alone received more than 700 applications from 79 countries. see

Digital Dubai (2021). ] In the process of developing the blockchain in the UAE, the incubator center also plays a key role. The most notable example is the Crypto Center established by the Dubai Multi Commodities Center (DMCC). DMCC is one of the largest free trade zones in the United Arab Emirates, providing tax and other incentives for resident companies. [The UAE has more than 40 free trade zones, which are specially designed for specific industries/industries, and provide a series of benefits for foreign investors, including tax-free arrangements for individuals and companies, and allowing the establishment of wholly foreign-owned company. ] The encryption center in the district will be opened in May 2021. It is positioned as a hub for encryption and blockchain technology. In addition to using shared workspaces and participating in various incubator and accelerator programs, enterprises stationed in the area will also have the opportunity to obtain 150 million US dollars (12 million Hong Kong dollars) Accelerator Fund. [See Dubai Multi Commodities Center (2022). ] The center also partnered with Switzerland-based CV Labs[CV Labs is the promoter of the Swiss government's Crypto Valley project, which has so far bred blockchain unicorns such as Ethereum and Cardano. See Dubai Multi

Commodities Center (2021). ], providing consulting services, business networking activities, and blockchain and entrepreneurship training for resident companies. As of January 2023, DMCC's encryption center has more than 500 settled companies, making it the largest concentration of encryption and blockchain companies in the Middle East. [See Dubai Multi Commodities Center (2023). ] Other UAE free trade zones are also committed to catching up with the pace of DMCC, among which Abu Dhabi Global Market (Abu Dhabi Global Market) [Abu Dhabi International Financial Center is one of the UAE's free trade zones and international financial centers. ] recently announced a US$2 billion (HK$15.7 billion) funding program to foster blockchain and

Web 3.0 startups. [Further details are expected to be announced by the authorities in due course. See Abu Dhabi Global Market

(2023)。 ]

Promote the development of metaverse technology

4.9 In addition to encouraging the development of blockchain technology, some selected places in this study have also increased investment in the development of the pioneering metaverse. It is estimated that by 2030, the size of the global Metaverse market will be as high as US$5 trillion (HK$39 trillion). [See McKinsey & Company (2023). ] In this regard, the United Arab Emirates and South Korea, as pioneers, have formulated a clear and comprehensive metaverse strategy, and have also made full use of related technologies to develop metaverse platforms to provide public services. As for Singapore, the local government has not officially announced any government strategy to guide the development of the Metaverse, but is actively trying to apply Metaverse technology to the development of tourism.

United Arab Emirates

4.10 The metaverse strategy launched by Dubai in July 2022 aims to build the emirate into one of the top ten metaverse economies in the world. According to the conception of this strategy, by 2030, the Metaverse industry will not only contribute US$4 billion (HK$31 billion) to Dubai's economy, but also provide about 40,000 virtual jobs, and improve the surgical industry through Metaverse technology. Productivity for professionals like doctors and engineers. [See Government of Dubai Media Office (2022b). ] Highlights of this strategy include [See Government of UAE (2023b). ]:

(a) Promote innovation - promote innovation through the promotion of research and development cooperation projects, and use accelerators and incubators to attract Metaverse companies and projects to Dubai;

(b) Cultivate talentsInvest in Metaverse education, with developers, content creators and Metaverse users as the main targets; and

(c) Development of Web 3.0 technology and related applicationsThe goal is to create a new government work model in major areas such as tourism, education, retail, law and medical care.

4.11 In addition, the Virtual Assets Regulatory Authority of Dubai

Authority, referred to as "A")[A established under Dubai Law No. 4 of 2022, is mainly responsible for supervising, supervising and managing virtual assets and related service providers throughout the Emirate of Dubai, but the Dubai International Financial Center is not included in the Inside.] In May 2022, it became the world's first regulatory agency to enter the metaverse, and purchased land in the virtual world The Sandbox to open the headquarters of the metaverse. According to the regulatory agency, this move represents a step forward for A step, seeking to "closer to the regulated industry and ensure that relevant stakeholders can be reached in the context in which the industry operates". [See Government of Dubai Media Office (2022a).] According to A, its Metaverse Headquarters will provide channels for potential license applicants to begin the application process and provide resources for other stakeholders to understand A's regulatory approach.

4.12 As Dubai leads the development of Metaverse in the UAE, other UAE government agencies are following suit, including: (a) The Ministry of Economy has announced plans to establish a Metaverse Office to complement its physical offices , providing a 24-hour service to clients and a virtual venue for hosting events and signing agreements [see Dubai Future Foundation (2022). ]; and (b) Emirates Health Services will embark on the use of 3D virtual reality technology to improve the effectiveness of virtual consultations and telemedicine programmes.

South Korea

4.13 The innovative development of Metaverse is regarded as one of the driving forces for the vigorous development of South Korea's culture and entertainment industry. The Ministry of Science and Information & Communications Technology (Ministry of Science and Information & Communications Technology) announced the metaverse strategy in early 2022, with a budgeted expenditure of 223.7 billion won (1.3 billion Hong Kong dollars), in line with the government's Digital New Deal 2.0 (Digital New Deal 2.0) Policy, which proposes to realize digital transformation to accelerate economic recovery after the epidemic. The main measures of its metaverse strategy include [see Ministry of Science and Information & Communications Technology (2022a, 2022b).

(a) activate the metaverse ecosystem by investing in metaverse projects in related fields such as education, manufacturing and medical care;

(b) Establish the Metaverse Academy to train the younger generation of developers and creators, and organize events such as competitions and hackathons for them to discover Metaverse talents;

(c) provide facilities for small companies and start-ups in the industry to conduct new product testing and application demonstration, and provide support for the commercialization of AR/VR and other immersive technologies to nurture metaverse companies; and

(d) Build a safe environment for Metaverse users, especially the establishment of an intergovernmental Metaverse Committee, which is responsible for studying legal issues related to personal data privacy and intellectual property protection, and establishing regulatory procedures for illegal activities in Metaverse.

4.14 At the municipal level, the Seoul government's "Metaverse Seoul" plan has made some progress. Officially launched in January 2023, the 3.9 billion won (HK$23 million) plan will be rolled out in phases to create a "digital twin" for the South Korean capital. The current plan focuses on improving various public services provided by the government through the public metaverse platform, including citizen complaints, tax consultation, youth counseling, and support for companies in trouble. [In addition, users can walk around the virtual city and explore cultural attractions through their virtual avatars, even while staying at home. See Government of Seoul (2023). ] The subsequent phase of the plan will expand the scope of public services that can be provided on the platform and add AR/VR technology to manage the city's infrastructure. The entire plan is expected to be completed in 2026. [See ibid and Forkast (2023). ] Reactions to the plan have reportedly been mixed, and while Time magazine named the plan one of the best inventions of 2022, there were still concerns about its cost and ease of use for the elderly. [See The Korea Times (2023) and TIME (2022). ]

Singapore

4.15 The Singapore Tourism Board (Singapore Tourism Board) is assisting the industry to use Metaverse technology to enhance tourists' travel experience, especially in response to the impact of the epidemic. Relevant measures include: (a) providing free 3D models of more than 100 iconic attractions in Singapore to the tourism industry, allowing them to develop projects involving AR, VR or other extended reality to provide immersive experiences for tourists; [See Singapore Tourism Board (2022a). ] and (b) develop proof-of-concept projects, such as developing AR applications for aquariums, allowing visitors to interact with marine life digitally; Travel the streets and alleys of Singapore in the metaverse and win prizes such as hotel and dining vouchers to use in physical venues. [See ibid and Singapore Tourism Board (2022b). ] In addition, Singapore is planning to combine metaverse technology with some national tourism projects and events. For example, the local major tourist attraction  Gardens by the Bay (Gardens by the Bay), provides visitors with an immersive metaverse experience, including digitally replicating the entire garden, and hosting a metaverse concert by Singaporean artistes as virtual avatars . [See Gardens by the Bay (2022). ] As for the Singapore Grand Prix (Singapore Grand Prix), which will attract about 250,000 spectators in 2022, a three-dimensional AR racing simulator will be used to allow the audience to experience the thrill of driving a racing car. [See Singapore Tourism Board (2023). ]

5 Conclusion

5.1 Web 3.0 is often referred to as a decentralized network, which means that the online world has broken away from the centralized intermediary platform model, allowing users to enjoy greater autonomy and control their personal digital life to a greater extent. DLT/Blockchain technology is the core technology of Web 3.0 and the cornerstone of many Web 3.0 technologies and applications, including virtual assets (such as cryptocurrencies), as well as NFT, DeFi and smart contracts. The Hong Kong government has announced a number of measures to support the development of the Web 3.0 ecosystem, with a focus on virtual asset markets and other financial services related applications. In this regard, there are concerns that Hong Kong's development in other Web 3.0 technology areas is not as good as it should be, so that it lags behind competitors in Asia and the Gulf region, because these places are making good use of their own advantages and potential to develop Web 3.0, so as to open up a wider range of Web 3.0 application scenarios.

5.2 In order to consolidate its position as a global innovation powerhouse, Japan is formulating comprehensive policies to support the development of multiple Web 3.0 areas, including adjusting its policy and legal framework to match the changes brought about by Web 3.0 technologies, such as NFT and emerging DAOs corporate structure. Although the relevant laws have not yet been issued, Japan has accelerated the pace of reform by establishing a dedicated Web 3.0 office to strengthen policy coordination among various government departments.

5.3 Other places outside of Japan are also focusing on developing one or more specific areas of Web 3.0 according to their respective competitive advantages and policy goals. For example, Singapore is exploring the application of DLT/blockchain technology at the financial level, and the UAE is focusing on implementing a number of blockchain-related initiatives to improve government efficiency, promote industrial development, and establish an international leadership in Web 3.0. As for South Korea and the Emirate of Dubai in the United Arab Emirates, it was one of the first governments to formulate an immersive metaverse technology development strategy.

5.4 Most of the above-mentioned policy measures announced by various places covered by the study are still in the planning stage or early stage of implementation, or it may take some time to determine their results and effectiveness. However, the experience of these pioneers may be used as a reference for Hong Kong to provide policy guidance for the local development of Web 3.0 technologies/applications.

Data Research Unit, Research and Information Division, Legislative Council Secretariat

Lu Jianxin

June 14, 2023

Tel: 3919 3181