Hong Kong could be the key to China’s crypto comeback: Arthur Hayes
Arthur Hayes, the former CEO of crypto derivatives giant BitMEX, believes the next crypto bull will start when China moves back into the market, and Hong Kong has an important role to play in this process.
In his Oct. 26 blog post titled “Comeback,” Hayes outlined why he believes the Hong Kong government’s announcement to introduce a bill to regulate crypto is a sign that China is trying to ease its way back into the market. This may be because Hong Kong acts as “the proxy through which China interacts with the world.”
“When China loves crypto, the bull market will return. It will be a slow process, but the red shoots are sprouting.”
Hayes argued that Hong Kong could become the testing ground for Beijing to experiment with crypto markets and act as a hub for Chinese capital to find its way into the global crypto markets.
“If these flows actually materialize in the way I envision, they will be a strong support for the next bull market.”
According to Hayes, Hong Kong’s “reorientation as a pro-crypto location” is a tip in Beijing’s strategy to reduce its position in a way that will not destabilize the internal financial system.
Hong Kong was ranked as the best prepared country for widespread crypto adoption in a study by Forex Suggest published in July 2022. It looked at several factors such as crypto ATM installations, pro-crypto regulations and startup culture.
China has one of the largest economies in the world, but has been largely hostile to the crypto industry. The country’s first ban came way back in 2013 when it banned banks from handling Bitcoin (BTC) transactions.
Beijing stepped up its crypto-cracking efforts in 2021 when it carried out several regulatory operations to eradicate Bitcoin mining from the country and deemed all crypto transactions illegal.
However, Hayes says “China hasn’t abandoned crypto — it’s just been dormant.”
Related: Possession of Bitcoin still legal in China despite ban, lawyer says
China resumed BTC mining in September 2022, and Chainalysis noted in its 2022 Global Crypto Adoption Index that China re-entered the top ten this year after ranking 13th in 2021.
The authors of the Global Crypto Adoption Index said they found the development “particularly interesting” given the Chinese government’s crackdown on crypto, but according to their data, “the ban has been either ineffective or loosely enforced.”
