This City Wants To Make A Crypto Comeback, But Will Beijing Quash The Effort?

Hong Kong wants to establish itself as a center for cryptocurrencies and is implementing new regulations that would make trading in digital assets by retailers legal in the city.

The initiative, which is set to begin in March 2023, would require crypto platforms to obtain licenses, according to a Bloomberg report.

However, the timeline for such a change has not been finalized and is still up for public comments.

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Elizabeth Wong, head of the fintech division at the Securities and Futures Commission (SFC), announced the decision last week to allow individual traders to participate in the trading of digital assets.

Speaking at a gathering, she stated that the SFC was trying to permit people to "directly invest into virtual assets" and that the government was considering its own crypto regulatory bill.

The city was once a major hub for Asian cryptocurrencies, hosting exchanges like Binance and Sam Bankman-Fried's FTX

However, a voluntary licensing scheme put in place in 2018 restricted institutional clients with portfolios worth at least HK$8 million ($1 million) from using cryptocurrency platforms. However, political unrest and regulations dimmed the Hong Kong's image as a favorable location for so-called "cryptopreneurs" to operate.

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China’s Role

BitMex co-founder Arthur Hayes expressed concerns over the possibility that China could use its influence to undermine Hong Kong's pro-crypto measures.

“What’s to say that Beijing won’t change its opinion tomorrow and rescind all these positive crypto policies?” he wrote on his blog.

Access to Chinese customers was essential to Hong Kong's appeal to crypto businesses, he explained.

“As crypto investors, we care about Hong Kong’s ability to facilitate Chinese capital’s needs," Hayes stated. "Whether it is in retail sales or capital flows, it is the ordinary wealthy Chinese people that power the Hong Kong economy."

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