Experts Tip China To Get Bullish on Crypto, Says New Digital Asset Framework In Hong Kong Is “Testnet” For China
- Hong Kong is looking to position itself as the Asian crypto hub this year, with plans to permit retail trading.
- Experts predict that the PRC will follow suit after Hong Kong sets the ball rolling due to the relationship between both jurisdictions.
- The Hong Kong digital asset guideline includes minimum entry level, market caps, and disclosures to ensure transparency and prevent market manipulation.
Hong Kong is on its way to regaining its lost status as the crypto hub of South East Asia with a detailed strategy that will potentially spin into China.
As Hong Kong reopens trading to retail investors in June, experts have weighed in on the ripple effect of a successful implementation. The new rules may find their way back into mainland China according to Anne Sophie Cissey, Flowdesk’s Head of Compliance.
China began its crackdown on cryptocurrencies in 2017, declaring them illegal before specifically attacking firms and shutting down mining operations, citing climate concerns. The country floated its digital currency to rival private digital assets, which it termed “risky and dangerous” to people and the economy.
With Hong Kong being a special administrative jurisdiction controlled by China, this move could be a test bed to introduce digital assets considering its previous harsh stance gradually.
“This has been the city’s traditional role for most of the time after 1997, Hong Kong’s handover to the People’s Republic of China. It is a major development in Chinese thinking since the country’s long-standing ban on digital assets and the start of the ‘one country, two systems’ model,” Ciccey noted.
She also added that China is tactical on the issue due to its authoritarian regime.
“Hence allowing Hong Kong to embrace a more crypto-friendly stance towards crypto, from the outside, suggests that Beijing wants to use the territory as a testing ground.”
Hong Kong set to attract the big players
Top web3 firms are looking to make a return to the region and have shown positive feedback following the rollout of new regulations. The new regulations take effect in June and will include a rigorous new licensing system to protect investors.
Firms are also expected to file periodic disclosures to prevent money laundering and market manipulations. Digital asset exchanges are given the green light to operate, but investors with a portfolio below HK$8 million will have certain restrictions.
Lennix Lai, OKX’s Chief Compliance Officer, lauded the stance of the government, saying that this is an important milestone in web3 development across the region.
“We welcome SFC’s official stance and commitment to allowing virtual assets trading by retail investors in Hong Kong. This is an important milestone for Hong Kong’s virtual assets industry as it continues to grow and develop.”
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