\n
![](\"https:\/\/images.cointelegraph.com\/cdn-cgi\/image\/format=auto,onerror=redirect,quality=90,width=840\/https:\/\/s3.cointelegraph.com\/uploads\/2023-06\/e22e0849-cca4-4013-b18d-e2c8f97d979a.jpg\")
<\/p>\n
\n<\/p>\n
Hong Kong \u2014 officially the Hong Kong Special Administrative Region of the People\u2019s Republic of China \u2014 is a city of over seven million residents on the eastern Pearl River Delta in South China. The city is known for being pro-innovation and technology, and over the past year, it has introduced legislation to promote and adopt cryptocurrencies.<\/p>\n
Hong Kong is a major world economy, serving as a center for investment and trade in the region. The city is a cosmopolitan metropolis with Western and Asian influences, and is a well-established data hub for key businesses in finance, shipping, trade and retail, with crypto becoming the latest addition.<\/p>\n
While China has maintained a hardline anti-crypto stance for almost half a decade, last year, Hong Kong introduced its own crypto legislation<\/a> allowing retail investors to invest directly in crypto assets.<\/p>\n In 2023, as most countries in the West are still cautious about cryptocurrencies, Hong Kong has taken a decidedly pro-crypto stance. <\/p>\n In January, as the crypto industry was reeling from the FTX crisis, Hong Kong\u2019s Financial Secretary Paul Chan said that local government and regulators are looking forward to building<\/a> a crypto and fintech ecosystem in 2023.<\/p>\n On Jan. 13, just days after Chan\u2019s statement, Korean tech giant Samsung announced the launch of a Bitcoin Futures Active ETF<\/a>, or exchange-traded fund, on the Stock Exchange of Hong Kong. <\/p>\n In mid-February, sources claimed that some Chinese officials were reportedly giving tacit approval<\/a> to Hong Kong\u2019s pro-crypto efforts. Local business operators stated that the Chinese government might even be open to using Hong Kong as a test bed for crypto as long as it doesn\u2019t threaten the country\u2019s financial stability.<\/p>\n By March, more than 80 crypto firms expressed interest<\/a> in opening an office in Hong Kong.<\/p>\n In April, the Hong Kong Monetary Authority (HKMA) \u2014 the region\u2019s central banking institution and regulator \u2014 called on banks to provide services<\/a> to cryptocurrency firms. The HKMA asked banking institutions to be attentive to market developments and take a forward-looking approach to the nascent tech sector, including cryptocurrencies. <\/p>\n In May, the chair of the FinTech Association of Hong Kong told Cointelegraph that the pro-crypto state would launch a licensing regime for crypto service<\/a> providers and exchanges with a deadline of June 1, including retail. Later in the month, the Hong Kong Securities and Futures Commission (SFC) announced that licensed crypto platforms would be allowed to serve retail customers<\/a>.<\/p>\n At the time of writing, crypto exchanges Huobi and Gate.io had applied for virtual asset licenses, with Huobi becoming the first member<\/a> of the Hong Kong Virtual Assets Consortium on May 31. <\/p>\n On May 29, Huobi opened its retail trading services as the firm submitted its license request to the SFC. A spokesperson from the firm told Cointelegraph that \u201cHong Kong regulations allow existing virtual assets platforms to operate for an extra year without a license.\u201d<\/p>\n #Huobi<\/a> HK \u73b0\u5df2\u5f00\u59cb\u5411\u4e13\u4e1a\u548c\u96f6\u552e\u5ba2\u6237\u63d0\u4f9b\u73b0\u8d27\u548c\u6258\u7ba1\u670d\u52a1\u3002\u4f5c\u4e3a\u4e00\u5bb6\u9999\u6e2f\u865a\u62df\u8d44\u4ea7\u4ea4\u6613\u5e73\u53f0\u7684\u5148\u9a71\uff0cHuobi HK \u5df2\u4e8e 5 \u6708 29 \u65e5\u6b63\u5f0f\u5411\u9999\u6e2f\u8bc1\u76d1\u4f1a\u63d0\u4ea4\u4e86\u7533\u8bf7\u901a\u77e5\u4e66\uff0c\u6211\u4eec\u671f\u5f85\u80fd\u591f\u83b7\u5f97\u865a\u62df\u8d44\u4ea7\u4ea4\u6613\u6240\u724c\u7167\u3002<\/p>\n \u5728\u672a\u6765\u516d\u4e2a\u6708\u5185\uff0cHuobi HK\u2026 pic.twitter.com\/qkYSqKbLBH<\/a><\/p>\n \u2014 \u706b\u5e01Huobi\u4e2d\u6587\u9891\u9053 (@HuobiGlobalzh) May 29, 2023<\/a><\/p><\/blockquote>\n Gate.io also announced it was applying for a virtual asset license<\/a>, as it had already operated as a custodian in Hong Kong since August 2022.<\/p>\n A spokesperson from the exchange told Cointelegraph that Gate.HK will officially file the license application in the second half of 2023. <\/p>\n Recent:\u00a0Is Biden\u2019s controversial Bitcoin mining tax dead or set to rise from the ashes?<\/a><\/em><\/strong><\/p>\n The exchange said, \u201cIn comparison to other regulators, the SFC has a stricter requirement for virtual asset service providers. It has compulsory insurance\/compensation arrangement requirements in place to help protect clients. Further, it has a 98% cold wallet storage requirement that licensed corporations would need to comply with. We believe only the best virtual asset service providers would be able to comply with the financial and operational requirements.\u201d<\/p>\n Binance, the largest global crypto exchange with a significant presence in the Asian market, is currently monitoring developments in Hong Kong. A Binance representative told Cointelegraph that it was actively involved during the \u201cpublic consultation period and contributed to the policy-making process of virtual asset platform regulation in Hong Kong.\u201d<\/p>\n The crypto exchange said it welcomes more regulatory clarity for the industry and is currently considering its options to best encourage the adoption of cryptocurrencies.<\/p>\n Bitfinex, another prominent global crypto exchange, told Cointelegraph that the developments in Hong Kong\u2019s crypto landscape clearly reflect the constantly evolving nature of the digital asset space. <\/p>\n The exchange welcomed favorable regulations allowing innovation and business growth, while providing a protective environment for all participants. When asked whether the exchange is looking to apply for a virtual asset license, a Bitfinex spokesperson said: <\/p>\n \u201cAllowing retail participation further democratizes access to the crypto marketplace. Accessibility for all is one of the reasons the crypto industry was born in the first place, and we welcome the progressive approach Hong Kong has taken.\u201d<\/p><\/blockquote>\n While Hong Kong enjoys a certain degree of autonomy, it is still part of China, which \u2014 as exemplified in the 2019-2020 anti-extradition law protests \u2014 can exert significant influence over the region.<\/p>\n China\u2019s anti-crypto stance made headlines in 2018 when the country imposed a ban on foreign cryptocurrency exchanges<\/a>. In the following years, China became a hub for Bitcoin (BTC<\/a>) mining but imposed a blanket ban on all crypto activities<\/a>, including mining, trading or exchanging, in 2021, although possession of Bitcoin<\/a> is still legal.<\/p>\n Many in the industry believed China\u2019s crypto policy would influence Hong Kong. However, Hong Kong\u2019s progressive crypto approach might become an escape for crypto users and interested parties in China, with many Hong Kong-based crypto firms receiving interest from Chinese banks<\/a>. <\/p>\n Firms such as Shanghai Pudong Development Bank, the Bank of Communications and the Bank of China have either started providing banking services to cryptocurrency enterprises in Hong Kong, or have contacted such organizations directly to offer services. <\/p>\n As of April 2023, the Hong Kong arm of the major Chinese state-owned Bank of Communications is collaborating with several cryptocurrency businesses<\/a>. <\/p>\n Gate.io\u2019s exchange spokesperson said, \u201cWe cannot interpret the implications on mainland China, as Hong Kong and mainland China have different regulatory stances, and are independent of each other.\u201d<\/p>\n Vivien Khoo, co-founder and chairwoman of the crypto industry association, Asia Crypto Alliance, told Cointelegraph that it\u2019s important to differentiate between crypto and Web3 more broadly when looking at the relationship between Hong Kong and mainland China.<\/p>\n \u201cThe Hong Kong government is a big proponent of Web3 rather than specifically pro-crypto. The digital assets ecosystem is much broader than crypto alone; while mainland China banned cryptocurrencies in 2021, it is bullish on the potential of Web3 and the application of blockchain technologies. The Web3 and digital finance industries look set to continue to grow overall in greater China,\u201d Khoo explained.<\/p>\n Recent:\u00a0Cryptocurrency markets\u2019 low volatility: A curse or an opportunity?<\/a><\/em><\/strong><\/p>\n Yuanjie Zhang, a co-founder of the Conflux Network, told Cointelegraph that the developments in Hong Kong will unfold in a framework of \u201cone country, two systems.\u201d<\/p>\n On one side, Hong Kong will become the \u201cstage for Chinese founders, venture capitalists, institutions and exchanges, where they cluster together and explore the frontier of the industry,\u201d while on the other, \u201cChina mainland will continue its policy under the central bank\u2019s guidance to prevent the prevalence of crypto onshore in the consistency of the capital control. More exchanges will exit the mainland markets, clear of the mainland ID users and move their staff to Hong Kong, Thailand and Singapore, etc.\u201d <\/p>\n Binance CEO Changpeng Zhao has said that the developments in Hong Kong, particularly the onboarding of retail traders, could very well become a driving force for the next bull run<\/a>.<\/p>\n<\/div>\nGlobal crypto exchanges eye the Hong Kong market<\/h2>\n
\n
The China factor<\/h2>\n