- A new Bloomberg report states that Beijing is supporting Hong Kong to transform it into a crypto hub.
- Officials from the Liaison office of China were spotted in crypto events in the city.
According to a Bloomberg, Hong Kong is preparing for a consultation process that might eventually legalize a form of retail crypto trading in the city. Meanwhile the mainland government in Beijing might be providing soft backing to the idea.
A report on China’s next crypto hub
The officials from China’s Liaison Office have been spotted at crypto gatherings in Hong Kong.
Some stakeholders believe that can be seen as an endorsement of Hong Kong’s push to lead as a crypto hub. Hong Kong is one China’s two Special Administrative Region (SAR) and is looking to exploit its separate legal system and markets to become a hub for the cryptocurrency industry. Hong Kong was China’s first test of open markets in the 20th century.
Per Bloomberg, Nick Chan, a National People’s Congress member and a crypto lawyer said that “as long as one doesn’t violate the bottom line, to not threaten financial stability in China, Hong Kong is free to explore its own pursuit under ‘One Country, Two Systems.’”
In addition, Hong Kong’s Securities and Futures Commision (SFC) took its first step for retail crypto trading on Monday. This began a consultation process for Virtual Asset Service Providers (VASPs) who were looking for a license to provide retail trading services.
Meanwhile, some of the needs the SFC proposes include a due diligence process on tokens prior to listings. This would see just pre-approved tokens that are available to traders along with setting up a risk profile for clients to ensure their exposure is “reasonable.” However, SFC concluded a multi-year consultation process that will see exchanges being allowed to provide service to professional investors on June 1st.
Till now, it is not yet known when the SFC ends its consultation process for allowing the access to retail investors.
On the other hand, if Hong Kong will reopen its operation then massive fresh inflows of funds can be seen in the crypto market. Hong Kong is the fourth largest financial center in the world followed by New York, London and Singapore. This could make the city one of the largest capital hubs in the world.
Also, Hong Kong is the first option for wealthy mainland Chinese to withdraw their capital from the isolated mainland. Estimates suggest that mainland Chinese moved around $500 billion in the economic zone in order to gain access to the global financial system.
Although Hong Kong will not enable truly decentralized crypto applications and self-storage (yet), the inflows of new funds could be positive for crypto markets.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.