In only a yr, Hong Kong has moved from being a cryptocurrency-unfriendly area to claiming the highest spot among the many most cryptocurrency-ready nations and territories. What’s the cause for such dramatic adjustments?
Based on Forex Suggest research, Hong Kong is finest suited to widespread cryptocurrency adoption. A rustic that is able to implement cryptocurrency has sure indicators, together with the variety of companies accepting cryptocurrencies, a positive regulatory setting, a thriving startup tradition, and truthful tax insurance policies.
A quick historical past of Hong Kong crypto regulation
In October 2022, Hong Kong authorities formally announced that they intend to develop the cryptocurrency market within the area by creating acceptable regulatory requirements. It was reported that the federal government, along with native monetary regulators, will create “favorable circumstances” for the event of the native cryptocurrency business. Native authorities additionally introduced their readiness to work with world cryptocurrency exchanges in order that they may open their consultant workplaces within the area.
Since then, the Hong Kong authorities have taken a number of initiatives in cryptocurrency regulation. The federal government may also allocate 50 million Hong Kong {dollars} (about $6.37 million) to speed up the event of the Web3 ecosystem.
Hong Kong additionally unveiled a plan to permit retail traders to commerce digital tokens corresponding to Bitcoin (BTC) and Ether (ETH), taking a serious step in direction of changing into a crypto capital. Now, the Hong Kong authorities intend to create “favorable circumstances” for growing the already present native cryptocurrency business. Town’s coverage change contrasts with the US crackdown following the FTX trade’s collapse.
A turning level within the historical past of cryptocurrency in Hong Kong occurred on June 1, when the native Securities Fee (SFC) launched new guidelines to manage cryptocurrencies. One of many necessary elements stays the requirement for itemizing cryptocurrencies on exchanges. The SFC requires belongings to be extremely capitalized, topic to obligatory inclusion in two of 5 impartial indices: Galaxy, Bitwise, 21 Shares, Wisdomtree, or Nasdaq.
Options of the common regime in Hong Kong
To create an enabling setting for web3 companies, the town is facilitating communication between banks and crypto startups, lots of that are scrambling to search out alternate options following the collapse of Silvergate Bank.
Hong Kong authorities promise to offer a secure buying and selling setting for monetary transactions with digital belongings. Utilizing a balanced method to crypto regulation permits the area to set traits in growing the digital forex market in Asia.
As well as, Hong Kong has a versatile tax system and a clear legislative framework. Due to this fact, the area has minimal enterprise dangers and an absence of funding choices. Furthermore, the authorities are dedicated to growing enterprise within the DeFi sector and introducing an expanded vary of crypto buying and selling choices.
Crypto firms shifting to Hong Kong
Amid uncertainty relating to the regulation of the crypto business within the US and different areas, a rising variety of firms are opting to ascertain their headquarters in Hong Kong.
Specifically, native authorities have been proactively attracting crypto corporations from mainland China, and main gamers within the crypto business, corresponding to OKX, Bybit, and Huobi, have expressed curiosity in relocating to the town. Round 20 firms are exploring the potential for opening consultant workplaces in Hong Kong.
Banks in Hong Kong, together with the native unit of a serious Chinese language state-owned lender, have additionally begun accepting cryptocurrency firms as new shoppers.
Banks have opened accounts for cryptocurrency corporations that can be utilized to conduct their common transactions, corresponding to payroll.
China secretly helps Hong Kong
Hong Kong’s want to change into a brand new cryptocurrency hub was unofficially supported by the Chinese language authorities. They intention to make use of the town as a testing floor for digital belongings as they tightly management any such exercise on the mainland.
Based on the previous head of the BitMEX trade, Arthur Hayes, Hong Kong can change into an middleman between China and the remainder of the world and contribute to China’s return to the worldwide crypto market.
That is confirmed by information from the Financial Times. Now, 50% of everybody who desires to purchase cryptocurrency in Hong Kong is Chinese language. After the PRC banned cryptocurrency exchanges, Hong Kong firms providing cryptocurrency started to fill this hole for residents of the remainder of China.
Usually, outlets the place you should buy cryptocurrency are situated in vacationer areas of the town. Guests should purchase crypto belongings with money with out id checks or inquiries concerning the origin of funds.
Notably, China started the struggle in opposition to cryptocurrencies in 2017 and banned their buying and selling in 2021. After this, a number of the largest crypto initiatives, corresponding to Binance and Tron, left the nation. For now, there may be little signal that Beijing will ease the ban on the mainland. However as a part of the “one nation, two methods” coverage, Chinese language officers help the event of the crypto business in Hong Kong