March 23, 2023
By Sharan Kaur Phillora
Last October, Hong Kong announced a high-profile push to become a virtual assets center, unveiling a series of supportive industry measures. Hong Kong wants to draw more virtual asset entrepreneurs and investors from the mainland, where all cryptocurrency trading activities are banned.
But the POW’ER Hong Kong Web3 Innovator Summit reassured investors about Hong Kong’s commitment to developing the virtual asset industry, which is still reeling from the sudden implosion of FTX, formerly the world’s second-largest cryptocurrency exchange.
Here’s what we know:
As the global crypto industry grapples with increasing regulatory scrutiny and clampdowns, new hubs for the virtual asset industry are emerging. One such emerging hub is Hong Kong, which recently proposed rules allowing retail investors to trade certain “large-cap tokens” on licensed exchanges, contrasting mainland China’s outright ban on crypto-related transactions.
In an interview with CNBC, Justin d’Anethan, institutional sales director at Amber Group, said, “If anything, China might be looking at the effect on Hong Kong following those rules, the issuance of new crypto-linked products or blockchain-based solutions, and the pick-up of trading and business activity that might ensue.”
A former Monetary Policy Committee member of China’s central bank, Huang Yiping, called on Beijing to review its widespread crypto ban last December.
Hong Kong has a long history as a financial hub and can potentially be a laboratory for China’s policymakers to test out blockchain’s potential with some buffer for the nation’s one billion netizens. The city’s proposal stipulates that all centralized virtual currency exchanges operating in the city or marketing services to the territory’s investors must obtain licenses from the securities and futures authority.
Despite Hong Kong’s supportive stance, mainland China is not showing any interest in changing its prohibitive cryptocurrency regulations.
″While there is some chatter about China potentially loosening its stance on crypto, so far there’s really nothing we can see to indicate anything like that,” said d’Anethan.
While China’s crackdown on crypto trading was aimed at protecting individual investors from speculative activity, the regulatory framework proposed by Hong Kong is more relaxed and can potentially attract more crypto companies and investments to the city. Implementing clear regulatory frameworks would help the industry gain mainstream adoption and attract more institutional investors.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.