Hong Kong is racing to become the world’s premier destination for the crypto industry, and the plans are gaining huge traction as crypto firms flood into the new regulatory environment.
Last month regulators in Hong Kong revealed plans to introduce cryptocurrency trading by retail investors and an upcoming licencing regime for cryptocurrency exchanges.
In an unexpected twist that sent Chinese cryptocurrencies surging, Beijing appeared to break from its hard-line stance against cryptocurrency to greenlight the autonomous region’s plans.
Indeed, according to rumour in Hong Kong, Beijing officials have become frequent attendees at crypto industry events across the city – reportedly taking a great deal of positive interest in developments. Some firms have even been asked to supply progress updates and market insights with Beijing.
Yi Gang, the Governor of the People’s Bank of China has given a number of talks and presentations in Hong Kong about the Digital Yuan CBDC in recent months.
It could be that Beijing’s changing rhetoric on crypto forms part of a wider strategy aimed at weakening the position of the USD as reserve currency, with cryptocurrency firms encourage to disrupt the space in face of a regionalising geopolitical sphere.
But equally, Beijing might see the emergence of nearby crypto hub as a lucrative opportunity for the roll-out of the Digital Yuan CBDC – which could become the fiat basis for HK registered ventures.
Crypto Hong Kong Migration: A Trickle Becomes A Flood
In the wake of February’s announcement, a handful of major players revealed they would be moving their operations to the city.
This includes none other than Justin Sun – the silver-tongued founder of the TRON DAO. Once an exile from Beijing’s hostile crypto policy, Sun now seems to be excited about the possibilities – in a recent interview he hinted at Beijing’s new approach to the HK crypto sector.
“The changing attitude of the Hong Kong SAR government towards crypto signals a nod from the Chinese central government granting pilot status to HK for some forward-looking experiments on how can crypto be best adopted and localized for the huge Chinese market at large,” explained Sun.
“I’m very bullish on the outlook for crypto in the greater China region for the next decade.”
As March has ticked by this gentle trickle of players into Hong Kong has grown to become an impressive flood.
In an exclusive interview with Bloomberg Television, Christopher Hui – Hong Kong City Secretary for Financial Services and the Treasury, revealed the scale of interest in the plans had completely caught planners off-guard – labelling the response ‘overwhelming’.
“Hong Kong is one of the pioneers in the world in terms of having a holistic regulatory regime for virtual assets more broadly, rather than crypto per se,” said Hui.
Indeed, right now of the 800 FinTech companies operating in Hong Kong – only around 10% are virtual-asset focused, and even fewer focused on token issuance.
But things could be changing, as it is reported that at least 80 institutions and entities have inquired with Hong Kong financial authorities about registration under the new plans.
With crypto trading and centralised exchange licensing tipped to begin on June 1, the Chinese narrative could well be off to another booming period of growth.
And with plans for stablecoin rules expected by 2024 – watch this space.
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This article was written for Business 2 Community by Sam Cooling.
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