- Hong Kong has shown no major indications in its capital flight in terms of both cryptocurrency and the traditional fiat currency.
- The main reason behind this is said to be Hong Kong’s antipathy towards cryptocurrency.
- Hong Kong has never received recognition as a cryptocurrency center due to its anti-crypto policies.
Very recently, China has launched a new agency in Hong Kong to keep a check over the involvement of security laws. In a recent report from Decrypt highlighted that Hong Kong has shown no major indications in its capital flight in terms of both cryptocurrency and the traditional fiat currency.
After the year-long protests of the Hong Kong citizens, economists have started to wonder when will the capital flee Hong Kong. Few months before the establishment of China’s new agency, Mike Pompeo, the US Secretary of State said that Hong Kong no longer has a high degree of autonomy from China. In the month of May, political tension was building up because Beijing had proposed a security law in Hong Kong. Economists are worried that if the US stops recognizing Hong Kong as a different state from China, it may affect their economy. This was because in 1983, Hong Kong had pegged its fiat currency with the US Dollar and the exchange rate was set at 7.75 to 7.85 with the aim of luring more foreign capital.
Paxful and LocalBitcoin Have Shown No Appreciation
Capital Flight is a condition when large migration of assets/capital from a country mainly due to financial or political instability or due to the burden of capital controls. The co-founder of Block Hong Kong, Clement Ip has announced that the volume of the transactions has doubled over the past few days. The total number of sign-ups has also increased considerably. However, data from UsefulTulips show that cryptocurrency marketplace such as Paxful and Finland based LocalBitcoin have shown no major appreciation in the considered period. In fact, the levels are well below December 2017, January 2018, and mid-2019 highs.
Hong Kong’s Pegged Dollar Running Behind Its Neighbour Fiat
Furthermore, when it comes to the Hong Kong Dollar it is ranked fifth in terms of the most converted fiat currency, running behind its peers, Thai baht and Philippine Peso. The main reason behind this is said to be Hong Kong’s antipathy towards cryptocurrency. In its past, Hong Kong is known for freezing many bank accounts because they were suspected of assisting crypto trading. Clearly this is an indication that as a cryptocurrency center Hong Kong has never received recognition due to its anti-crypto policies.
Amidst all the mess, Hong Kong economists are still looking for evidence whether the citizens of Hong Kong are fleeing capital outside the nation or not. Certainly, it is clear that crypto capital flight has not occurred in Hong Kong yet.