While China has tightened down on cryptocurrencies on the mainland, it is adopting a gentler approach to Hong Kong’s ambitions to become a crypto powerhouse. How exactly?
The Chinese government supports Hong Kong’s aim to become a cryptocurrency center, which might be regarded as a contrast to the mainland’s hardline anti-crypto position.
In fact, in October of last year, the Hong Kong government proposed the possibility of presenting its bill to regulate crypto and allow ordinary investors to “directly invest in virtual assets,” perhaps in contrast to China’s extensive crypto ban.
Beijing’s Reaction to Hong Kong’s Plan
Those in the inside claim that Beijing officials have not openly criticized the plan. Moreover, according to a Bloomberg article from the 20th of February, officials from the China Liaison Office have been seen at recent crypto events in Hong Kong.
While Beijing’s open reaction is still not public regarding Hong Kong’s crypto ambitions, local crypto company operators believe Beijing has been gently hinting that they are willing to use Hong Kong as a testbed for crypto because of their interactions with Beijing officials on the topic, have been positive so far.
Additionally, the National People’s Congress member and digital asset lawyer Nick Chan states that, as long as there are no violations of the bottom line not to jeopardize financial stability in China, the city is free to pursue its interests.
Hong Kong’s Crypto Aspirations
Hong Kong is a Chinese Special Administrative Region with its own laws and government. The former British colony was returned to China in 1997 after Beijing guaranteed that there would be no Chinese meddling in the region’s economic and political systems for the next 50 years, a notion known as the “one nation, two systems” principle.
On February 20, Hong Kong’s Securities and Futures Commission unveiled a new crypto licensing framework, proposing that all centralized exchanges operating in the territory obtain a license from the regulator.
It also recommended granting retail traders access to approved cryptocurrency trading platforms, citing public input that limiting Hong Kongers access to crypto markets may lead them to trade on unregulated offshore platforms.
Due to the current regulatory push, many crypto businesses are looking to expand into the city. Recently, the exchange Huobi Global announced that it would seek a local license and launch a new Hong Kong-only exchange aimed at institutional and high-net-worth people.
