Hong Kong opened its doors to cryptocurrency companies in October in an effort to revive the troubled financial center. There are now hints that Beijing is supporting the initiative covertly, which is encouraging mainland Chinese businesses to reopen.
According to people familiar with the situation who declined to be identified discussing personal information, representatives from China’s Liaison Office and other officials have been frequent attendees at the city’s crypto gatherings over the past few months, exchanging business cards and WeChat information. According to the people, interactions have been polite, with officials checking on progress, requesting updates, and occasionally making follow-up calls.
Local crypto entrepreneurs claim that Beijing’s position on Hong Kong’s ambitions to establish itself as a hub for the industry is being clarified by their presence. The covert support demonstrates that authorities are eager to use the free-wheeling metropolis as a trial ground for digital assets while closely monitoring any such action on the mainland.
Following suit, mainland and foreign companies are attempting to register their operations and preparing to return to Chinese territory 15 months after Beijing outlawed the sector and pushed them to establish operations abroad.
“Under ‘One Country, Two Systems,’ Hong Kong is free to explore its own pursuits,” said Nick Chan, a member of the National People’s Congress and a lawyer who provides advice on cyber-security and digital assets. As long as one doesn’t break the fundamental principle, to not endanger China’s financial stability.
A plan to allow retail investors to buy digital tokens like Bitcoin and Ether was unveiled by the city on Monday, outlining a further openness to the cryptocurrency market. The Securities & Futures Commission said in a consultation document that under certain conditions, including as knowledge exams, risk profiles, and acceptable restrictions on allowable exposure, individual investors would be permitted to trade larger coins on exchanges that hold a license from the agency.
On Tuesday, cryptocurrencies and blockchain-related stocks surged in China. Digital asset firm OKG Technologies Holdings Ltd. saw a rise of up to 22% in Hong Kong. The owner of a cryptocurrency platform, New Huo Technology Holdings Ltd., increased by as much as 14%. At one time, mainland China had a 10% gain in Shenzhen Forms Syntron Information Co., a software company.
When China began to crack down on cryptocurrencies in 2017 and outlaw trading in 2021, some of its biggest domestic brands, like Binance and Tron, left the country. Just recently did the second-largest economy in the world loosen its control over the advancement of the blockchain technology that underpins these digital assets, enabling the creation of some NFTs.
In light of worries about consumer protection, the use of cryptocurrencies to get over financial controls, and the environmental harm caused by the energy used for Bitcoin mining, there is currently little sign that Beijing will ease its own ban.
The objective of the reports, according to the sources, is unclear, but the mainland representatives are informing their superiors in mainland China of what they learned in Hong Kong.
China’s cryptocurrency policy won’t change as long as it remains under Party control, according to He Yifan, the founder and CEO of the state-backed blockchain company Red Date Technologies. It has no positive effects on the real economy.
Chinese officials have openly supported Hong Kong’s goals of becoming a fintech center in recent months. Governor of the People’s Bank of China Yi Gang spoke at important events in Hong Kong about China’s progress in developing its digital currency and close collaboration with the Hong Kong Monetary Authority.
Hong Kong’s resurgence in cryptocurrency coincided with the demise of industry titan FTX and contrasted with Singapore’s tightening regulations. Hong Kong has to win back the Chinese cryptocurrency entrepreneurs who have fled to other countries in recent years in anticipation of clearer laws in Hong Kong if it is to be successful in its mission.
Justin Sun, the creator of Tron, is one who is preparing a comeback. Last month, he announced on Twitter that he will move to Hong Kong to be “near to the action.” He stated earlier this month that Huobi, a digital asset exchange, intended to increase its activities there.
Justin Sun, the creator of Tron, is one who is preparing a comeback. Last month, he announced on Twitter that he will move to Hong Kong to be “near to the action.” He stated earlier this month that Huobi, a digital asset exchange, intended to increase its activities there.
In a January interview, Sun stated that the Hong Kong SAR government’s “changing attitude towards cryptocurrencies signals a nod from the Chinese central government granting HK pilot status for some forward-looking experiments on how can cryptocurrencies be best adopted and localized for the enormous Chinese market at large. He have high hopes for the future of cryptocurrencies in the broader China region over the next ten years.
Also, smaller businesses are moving into the city.
Web3
According to co-founder Caspar Wong, over 70% of the 300 Web3 companies that have joined up for Hong Kong’s accelerator program G-Rocket were created by foreign Chinese entrepreneurs, while roughly one-quarter were headquartered in mainland China.
A lawmaker for the technology sector in Hong Kong said that they are the window of China, yet they have assimilated laws, customs, and economic ideas from throughout the world.
Competition from other countries like Singapore and Dubai will always exist, he declared. That will only motivate them to work more, and the key is finding the right balance between licensing and regulating the business while preventing overregulation that would encourage innovation.
The new licensing system for virtual asset exchanges in Hong Kong will go into force in June, while applicants anticipate a longer wait time for official permits.
The larger finance sector is closely monitoring the events but warns that entrance may be difficult. Tan Yueheng, chairman of BOCOM International and permanent honorary chairman of the Chinese Securities Association of Hong Kong, predicted that only a small number of companies would likely be able to meet the requirements for risk management controls, systems, product knowledge, and capital quality to justify a license.
