Financial institutions in Mainland China are now banned by Beijing to get involved with cryptocurrency assets at home. Now, these institutions are now considering launching related businesses in Hong Kong, according to South China Morning Post.
(Photo : Anthony Kwan/Getty Images)
HONG KONG, CHINA - FEBRUARY 15: Pedestrians walk past an advertisement displaying a Bitcoin cryptocurrency token on February 15, 2022 in Hong Kong, China. Cryptocurrencies are gaining popularity worldwide as investors seek to diversify into the new asset class despite wild swings in the valuations of assets like Bitcoin and Ethereum in the first weeks of the year.
The idea is triggered by the new measures that are now boosting Hong Kong's status as a crypto hub. Therefore, several Chinese banks, family offices, and other financial service providers in Mainland China are considering starting or reactivating virtual asset projects in the city. These projects include providing cryptocurrency services.
A Different Take On Things
Why Hong Kong? Unlike Mainland China, Hong Kong doesn't see cryptocurrency as a threat to their financial stability. On the other hand, Mainland China sees the opposite; hence, they strictly prohibit banks from dealing with crypto. In fact, last year, the central bank in China issued a notice clarifying that providing cryptocurrency services to Chinese citizens is illegal.
Some financial institutions in Mainland China already have their own Non-Fungible Token (NFT) and metaverse businesses in Hong Kong. However, their projects have slowed down because of what they call "crypto winter" and city regulations are still unclear.
With the latest regulatory change, businesses are getting a clear signal that more virtual asset-related investment products are encouraged to come to Hong Kong. The city also has proposed a series of policy measures that aims to restore its status as a crypto hub.
Also Read: Crypto Crackdowns Further INTENSIFY In China, Causing Major Coins' Values To Dip
The new measures include a new licensing regime for virtual asset providers that will enable financial services to sell crypto-related assets to retail traders. Hong Kong will also study how to develop exchange-traded funds with exposure to cryptocurrencies, along with reviewing property rights for tokenised assets and the legality of smart contracts.
Also last month, the director of licensing and head of the fintech unit of the Securities and Futures Commission (SFC), Elizabeth Wong, reassured Hong Kong businesses on cryptocurrencies that they are separate from that of Mainland China because of "one country, two systems."
In fact, this has also made a lot of crypto enthusiasts in mainland China excited about Hong Kong's change in direction. Now, they say that the city could now be a good place for their ventures related to crypto. On the other, a lot of investors and observers are cautious as they wait for more detailed measures.
The new changes in Hong Kong are likely to help a lot of Mainland Chinese to carry out their crypto-related activities.
Blockchain technology is becoming more and more popular and there have been a lot of attempts by governments and financial institutions to try to understand the potential of the technology. It is not surprising that Hong Kong is now poised to become a crypto hub again after China banned crypto trading.
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Written by April Fowell
