On the 31st of October, regulators announced that they are working to become more open to cryptocurrencies and blockchain. Moreover, they stated that they want to make Hong Kong a crypto hub as it once was. These statements make Hong Kong one of the most ambitious cities when it comes to virtual assets. To add to this, the government made an announcement that it will start consulting within itself to allow retail investors to invest in such assets. Nevertheless, they also let the public know they will only allow and promote investments on licensed platforms. This is a big step for Hong Kong and the crypto market as a whole. These developments are likely going to open the door for millions of investments in the crypto sector.
While this might be considered groundbreaking news, it isn’t something we weren’t expecting. Hong Kong was one of the main crypto hubs just a few years ago. Bitmex, for example, has an office just above Hong Kong’s financial regulator, the Securities and Futures Commission (SFC) office.
After some time, however, the SFC introduced a more rigid set of rules and began investigating cryptocurrency exchanges. This caused multiple exchanges to worry regarding the tokens that they have listed, and this caused Hong Kong to fall from the very top when it comes to the platform it provided as a crypto hub. Some reports show that exchanges had to get a legal opinion for each token they want to list. Well, the price for a legal opinion at that time was approximately $10,000. Doing so for each token meant paying millions of dollars only in legal opinions. The exchanges did not like what was going on and decided to move out.
China’s Influence on Hong Kong
Most of you have probably heard of China’s anti-crypto policies lately. Well, they are not something new either. China has been working against cryptos since 2013. Back on December 2013, this country banned banks from executing crypto transactions and anything related to Bitcoin. After 2013, China came up with new hostile stances in relation to crypto every two years or so. Well, just a few years ago, China banned all crypto services in the country. While Hong Kong is a part of China, they claim that they operate using the “one country two systems” principle. What this principle means is that, while China can hold a certain stance towards cryptocurrencies, Hong Kong doesn’t necessarily have to hold the same stance. In the past months, this city has been working tirelessly in promoting Web3, blockchain, and NFTs.
This did not convince crypto projects to continue operating in Hong Kong. Thus, most of them left for countries that have pro-crypto jurisdictions. Take Singapore as an example. Because of its crypto-friendly nature, this city-state hosts more than 500 blockchain-based companies. Today, Singapore holds the crown as one of the best places for blockchain and Web3 startups.