Hong Kong on the way to becoming a global crypto hub: What that means for China’s ban on Bitcoin & Co

• In contrast to mainland China, Hong Kong is increasingly pursuing a crypto-friendly policy
• Hong Kong’s stock exchange authority plans to license crypto trading platforms
• Some entrepreneurs hope that China will move away from the crypto ban – so far in vain

Hong Kong is well on the way to becoming one of the most attractive locations for virtual assets alongside Dubai, Singapore, Malta and Switzerland. And this despite the fact that the Chinese state, to which the former British colony of Hong Kong has belonged since 1997, already banned trading in Bitcoin, Ether & Co. and all other crypto activities in May 2021.

Advertising

Trade Cardano and other cryptos with leverage via CFD (long and short)

Cardano and other cryptocurrencies have recently corrected significantly. Trade cryptos like Bitcoin or Ethereum with leverage at Plus500 and participate in rising and falling prices.

Plus500: Please note the Hints5 to this advertisement.

Crypto-friendly policies in Hong Kong attract businesses

The major divergence between mainland China and Hong Kong can be explained by the political autonomy that the globally oriented port city continues to enjoy in some areas, despite China’s increasing intervention in Hong Kong politics. In this way, trading in cryptocurrencies can continue in Hong Kong, while this is already not possible in this form in the Chinese city of Shenzhen, a few kilometers to the north. Hong Kong also attracts crypto companies with a low tax burden: The corporate tax rate for the first HK$2 million (about 240,000 euros) in taxable profit is 8.25 percent, and any profit in excess of this limit is then charged at 16.5 percent percent taxed.

New laws could give Hong Kong’s crypto sector a boost

In June, the Hong Kong Securities and Futures Commission (SFC) plans to introduce a mandatory licensing of trading platforms for virtual assets, which would allow crypto exchanges to operate completely legally. The regulator has already launched a consultation on its proposal to regulate virtual asset trading platforms. The new regulations are intended to make crypto policy more transparent and enable future innovations. In this way, Hong Kong’s growing importance for international trade in digital tokens should increase.

However, some experts stress that it may be difficult for international retail investors to jump on the crypto bandwagon in Hong Kong. “Hong Kong will introduce a stringent set of regulations for crypto trading platforms,” ​​Yuya Hasegawa, a market analyst at Japanese crypto exchange Bitbank, told CNBC. Therefore, in his view, it is by no means a foregone conclusion that Hong Kong’s trading activities related to virtual assets will experience an upswing as a result of the new laws.

On the other hand, Justin d’Anethan, head of institutional sales at Amber Group, is far more optimistic about the impact of the announced crypto regulations. He expects Hong Kong’s new laws to “spur a revival in crypto business activity,” which will entail the issuance of new virtual asset products and blockchain-based solutions.

Crypto entrepreneurs are glancing hopefully towards China

Many international crypto companies are following the upcoming regulations in Hong Kong with eagle eyes, mainly because they hope that this will ease China’s crypto attitude. “China may be looking at the impact of these new rules on Hong Kong,” said Justin d’Anethan. The entrepreneur hopes that the valuable crypto innovations in Hong Kong could then spill over to China and that the Chinese Communist Party (CP) would then relax its strict crypto ban.

Hashkey Capital CEO Deng Chao is similar, noting that the potential legalization of cryptocurrencies in Hong Kong could serve as a compass for China. “In the future, it could serve as a model for formulating policy in other regions of China if it proves successful,” he writes in an email to CNBC, adding that Web3 and crypto companies are finally taking a more compliant approach could adopt for their daily operations.

For the time being, China is not shaking the official crypto ban

However, there is still a long way to go before the KP, which is not necessarily considered to be willing to compromise, moves away from its strict ban on virtual assets. Back in December 2022, Huang Yiping, a former member of the Chinese central bank’s monetary policy committee, urged Beijing to reconsider the sweeping crypto ban. Huang warned that China could miss important opportunities for digital technology development if crypto transactions remain banned. However, Huang’s request went unanswered by Chinese leaders.

d’Anethan also remains skeptical and does not expect a turnaround in China’s crypto policy any time soon. “While there have been some rumors that China might be relaxing its stance on cryptocurrencies, so far there have been no signs to suggest so,” d’Anethan said. However, despite the official crypto ban by the Chinese government, it is an open secret that crypto activities such as large-scale Bitcoin mining continue to take place in China.

Editorial office finanzen.net

Image sources: leungchopan / Shutterstock.com, Wit Olszewski / Shutterstock.com

ttn-28