Financial Secretary Paul Chan says he believes the recent volatility in the virtual asset market will actually provide good opportunities for Web3 developments, even though some may be doubtful of its prospects.

Writing on his blog on Sunday, Chan noted that after the dot-com bubble burst in 2000, speculators were replaced by competent market participants who were focused on innovation, application and value creation, as well as improving the quality of the real economy.

He said he believes Web3 – the next generation of internet technologies – is now going through the same process.

“In the next stage, market participants will have to further develop blockchain technologies, utilise the merits of being transparent, efficient, safe, decentralised, deplatformed and low-cost, and try to apply them to more scenarios, solve problems in existing business models and even break up monopolies,” he wrote.

Chan said that in order to provide a stable environment for Web3 developments, the government will introduce suitable regulation and promotion.

He noted that in June authorities will introduce a licensing regime for virtual asset service providers and is also studying how to regulate “stablecoins”, to make sure the virtual asset market develops in a sustainable and responsible way.

He said the government will also step up education and protection for investors, and intensify efforts against money laundering.

The financial chief noted Hong Kong will host a series of events relating to digital economy and Web3 developments in the coming week, added that he hopes these will bring more in-depth exchanges and discussion of the sector.