Hong Kong’s push to become a crypto hub is gaining momentum, and there are signs that it has under-the-radar backing from Beijing. It is providing impetus for mainland Chinese firms to return, according to a report by Bloomberg.
In recent months, officials from China’s Liaison Office and other related entities have been regular attendees at various crypto events in the city. During these events, they monitored progress, requested updates, and occasionally followed up with calls.
This subtle backing suggests that these officials are interested in exploring the potential of digital assets and see the city’s hands-off approach as a suitable environment for testing and experimentation.
The presence of these officials has made it clear that Beijing supports Hong Kong’s pursuit of exploring digital assets as a testing ground, despite the ban on the industry on the mainland.
Following Beijing’s 15-month ban on the industry and the consequent exodus of many firms to shop overseas, domestic and foreign firms are now eager to return and register their businesses in Hong Kong.
As per Bloomberg’s report, Nick Chan, a National People’s Congress member, has stated that Hong Kong is free to pursue its own interests under the “One Country, Two Systems” framework as long as it does not jeopardize China’s financial stability.
Hong Kong’s Further Opening To Crypto
Chinese crypto entrepreneurs are returning to Hong Kong due to the city’s renewed interest in crypto. Tron founder Justin Sun plans to relocate to the city to be “closer to the action,” while Huobi also plans to expand its operations there.
Additionally, Hong Kong’s accelerator program G-Rocket has attracted mostly overseas Chinese entrepreneurs, with 70% of the 300 Web3 firms that have signed up falling into this category.
However, the Hong Kong SAR government’s changing attitude towards crypto has sparked interest in the finance industry. Still, entry may be difficult, with only a few firms expected to meet licensing requirements on risk management, systems, product knowledge, and capital quality, according to Tan Yueheng, chairman of BOCOM International.
Nonetheless, it is clear that the renewed interest in crypto is attracting Chinese crypto entrepreneurs to return to Hong Kong and that the finance industry is watching these developments closely.
Hong Kong’s pursuit of becoming a fintech hub will require a balance between regulation, licensing the industry, and not over-regulating it to hinder innovation.