Before a series of events last week, it had been a year since anything meaningful regarding the Chinese crypto ecosystem made headlines. The Hong Kong government made a major policy announcement last Wednesday, signaling that the city was ready to welcome crypto firms. On top of that, Web3 Festival took place in that region, bringing together crypto players from various spaces like decentralized finance, NFT, and blockchain games, among others.
It is worth highlighting that crypto is still banned in most parts of China, but since Hong Kong enjoys some policy exceptions, it has been given the go-ahead to regulate the nascent industry.
Meanwhile, during the Web3 Festival, Hong Kong officials took the stage, assuring the crypto community of their commitment to digital space. This is entirely different from what’s being witnessed in the United States, where the Securities and Exchange Commission and other regulators have declared regulatory war on crypto players.
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As the US continues to become hostile toward the crypto industry, Hong Kong has opted to follow Singapore’s footsteps in banking on blockchain technology to rejuvenate its ailing economy, which was caused by the introduction of the National Security Law in 2020 by Beijeng, pushing international companies out of China.
More Crypto Companies Expected to Start Operating in Hong Kong
Hong Kong now hopes the new regulations that provide clear guidance on how to operate a crypto business in the city will attract more companies. Crypto exchanges OKX and Huobi have already applied for licenses to operate in Hong Kong.
Further, another centralized exchange Bitget announced earlier this week that it intends to open offices in the city. Besides exchanges, several crypto asset management companies promised to expand their operations in Hong Kong during the Web3 Festival.
With most of the centralized exchanges being founded by Chinese entrepreneurs, the majority of the attendees were from that sector, including Justin Sun of Huobi, Ben Zhou of Bybit, Changpeng Zhao of Binance, Shawn Liiu of Bitget and Star Xu of OKX. Most of these founders got the opportunity to take the stage, where they gave speeches praising the Hong Kong government for its latest move.
The founder of HashKey exchange, Xiao Feng, said he was confident that clear regulations would make Hong Kong an international crypto hub. HashKey, along with OSL, were the only exchanges that secured licenses in November when the Hong Kong government made it mandatory for every exchange to acquire one. More licenses are expected to be issued in June.
One notable guest speaker was Justin Sun. The Huobi CEO arrived on stage with a model to promote iPollo, a Web3 wallet that has seen little usage since its inception, although it is famous for its beautiful promoters. There were rumors that Sun had been arrested after the event in connection to the recent charges leveled against him by the US Securities and Exchange Commission. However, he took to Twitter to quash the news.
Hong Kong Government to Collaborate With ZA
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Moving along, several media outlets have reported that Hong Kong is looking to partner with crypto-friendly bank ZA in an effort to help facilitate on-ramp and off-ramp transactions for crypto companies that will be operating in the region.
The government hopes it will provide a healthy environment for crypto businesses to flourish, just like it has done for traditional financial institutions. At the moment, however, there is a minimal chance that we will see a crypto project developed by a young Hong Kong-based entrepreneur. That’s because the latest data indicates that most young people in the region are largely focused on finding a stable job rather that being involved in a high-risk, high-reward play. Whether that narrative will change in the future remains to be seen.
That being said, Hong Kong will face massive competition from other cities that are also aiming to become a crypto hub. One of the rivals is Dubai, which started distributing licenses to crypto companies last year. Bybit is among the crypto exchanges that have begun operations in Dubai.