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Hong Kong Readies To Become Crypto Hub Amidst Industry Turmoil

Hong Kong Readies To Become Crypto Hub Amidst Industry Turmoil

By Oreld Hadilberg
Reviewed by Tony Spilotro

Table of Contents

Many people, companies, and countries are exploring the potential of the crypto world. Hong Kong is also following the trend with special interest. The Chinese special administrative region plans to become a global crypto hub in virtual assets.

Hong Kong will welcome new crypto firms and startups to achieve its aim and expand its horizon. This move will help to facilitate crypto retail operations within the region.

The Financial Secretary of Hong Kong, Paul Chan, spoke in Cyberport, a Web3 forum. Chan maintained that Hong Kong is deploying all the necessary actions to set the region in global crypto retail participation. Furthermore, he confirmed that the region had declared his dream since last October before the FTX saga.

Further, Secretary Chan commented on Hong Kong's favorable city policy statement, which is attractive to many prominent tech companies and startups. Hence, some declare plans to establish their headquarters or expand in Hong Kong.

According to Chan, some firms have contacted the government over the past few months. Also, Chan mentioned that Hong Kong’s scale of business is attracting some companies to list in the region.

Hong Kong is showing its strong desire to delve deep into the crypto space despite the waves from the FTX implosion. But, its rival, Singapore, is slowing down in the crypto industry due to the decline in the crypto markets. The crash of the Sam Bankman-Fried’s led exchange also dealt a devastating blow to several crypto tokens and investment firms.

Hong Kong Established New Crypto Regulation

Hong Kong is staying strong toward its plan in fronting crypto retail operations. The city’s administration has promulgated all the relevant legal frameworks for its new crypto regime. It has a regulatory licensing process covering its provisions for digital asset products and services.

The rule demands that all crypto exchanges and firms within the region will always comply with the new licensing regime. It covers several requirements that crypto firms must satisfy to operate in the city. These include investor protection, anti-terrorist financing, anti-money laundering (AML), and others.

Also, the regulation is meant to sync with traditional financial institutions in the city. Usually, such institutions lay the foundation of market recognition for crypto exchanges and firms.

The Under Secretary for Financial Services and the Treasury of Hong Kong, Joseph Chan, supported the process. He revealed that the city plans to conduct a consultation concerning cryptocurrency platforms. This action will be helpful for them to discover and explore more opportunities that will grow the region’s crypto retail participation.

Further, Joseph Chan acknowledged the liquidation of some crypto exchanges and the aftermath contagion. He reiterated that Hong Kong has stood as a reputable ground for digital asset companies. The region boasts a strong regulatory framework in sync with international standards. Also, he noted that the city regulations cut off the presence of fraudsters.

Hong Kong's Securities and Futures Commission (SFC) also softened the regulatory requirements for retail investors last December. By removing the professional-only requirements, retail investors can now trade on crypto assets.

The SFC issued a statement regarding the offers from crypto service providers to investors. The regulator reminded investors of the risks related to crypto firms through their services like savings, earnings, staking, and deposits.

The Possibility of Success for Hong Kong’s Crypto Retail Participation

Before now, Hong Kong stood as a financial hub in China. With its recent move and interest in crypto retail participation, the future may seem quite unsure.

Based on the past stance of China on crypto transactions and mining, some investors and enthusiasts are playing the observing game. Moreover, China still strongly influences the activities of its administrative region, Hong Kong.

APENFT, a multichain platform for NFT activities, took to Twitter to sample people's opinions concerning Hong Kong being a crypto hub. Some of the comments are supportive and positive about the action.

A Twitter user, JoJo, wrote that the information was good news. Another user Shubham Chavan mentioned that he’s giving 100% support considering that China recently bought 30 Tons of gold. He added that Bitcoin is gold backed.

However, some think China could take the upper hand in the move by controlling Hong Kong. For example, one of the tweets from LackBobby cited that the information would have been good news if China didn't control Hong Kong. Also, another tweet from the JOKER OF CRYPTO touted that all problems originate from China.

Will China as a Country Interfere With Hong Kong’s Move into Crypto?

Globally, China is popular for its aggressive stance on cryptocurrency. It is one of the countries that have caused a decline in the crypto markets.

In early 2021, the crypto industry experienced increased adoption with massive growth. However, the Chinese government suddenly came up with a crackdown policy on crypto mining and other activities in its major cities in the same year. This move brought a decline in the crypto market. Also, most crypto-related firms and users left China as the country became anti-crypto.

So, the fear of the Chinese government overruling the action and moves of Hong Kong in its crypto adoption is real.

But in October 2022, the director of licensing at SFC, Elizabeth Wong, reassured the public of the good crypto regulation in Hong Kong. According to Wong, Hong Kong maintains a different crypto regulatory environment from mainland China.

The director explained that Hong Kong as a region is separate from mainland China. Hence, it can run its bills for crypto regulations without interference from the mainland.