Hong Kong tempts mainland China crypto firms in push to bolster financial hub status
By Josh Ye
HONG KONG (Reuters) – After years of bankers quitting Hong Kong amid a security breach in China and tightening covid curbs, the city is rolling out the red carpet to a financial sector battered by events elsewhere in a bid to strengthen its status as a financial hub – cryptocurrencies.
While scandals and high-profile bankruptcies have caused some governments to distance themselves from the cryptocurrency industry, Hong Kong is pulling out all the stops to justify mainland China’s crypto companies re-basing in the city. Mainland China banned cryptocurrency trading in 2021.
Top government officials, such as Hong Kong Chief Executive John Lee, are pledging their support, and the city is scheduled to host 100 crypto-related conferences and lavish parties throughout April.
The Hong Kong government “is very serious about building an international virtual asset center,” said Xiao Feng, chairman of Hong Kong crypto exchange HashKey, which saw 13,000 people attend the first day of its Hong Kong Web3 Festival, the month’s biggest conference. , on Wednesday.
HashKey received a license to operate in Hong Kong last November, making it one of two licensed crypto exchanges in the city alongside rival OSL.
According to Xiao, many in the crypto industry believed that Hong Kong would inevitably adopt the same regulations as mainland China. But he said the government is now trying to emphasize that Hong Kong practices different laws from mainland China under the “One Country, Two Systems” framework.
To be sure, many remain skeptical of Hong Kong’s promise of a stable regulatory regime for cryptocurrencies. One crypto venture capitalist, who declined to be named citing the sensitivity of the case, said he remained concerned as China’s crypto ban still lurks in the background.
“If Hong Kong can suddenly say it’s crypto-friendly like there’s a switch, that switch can just as suddenly be turned off if things get difficult,” he said.
Still, at least 10 companies with Chinese founders including OKX, Bybit, Huobi have announced or plan to announce their bids for licenses in Hong Kong, according to firms and media reports.
These firms, which have left countries such as Canada and the UK, are among the sponsors of the glitziest Hong Kong parties this week. Bybit held a private dinner for industry heavyweights where delicacies from Hiroshima oysters to fish maw soup were served, while OKX booked a rooftop venue with views across Victoria Harbour.
At an event on Tuesday, crypto entrepreneur Justin Sun told a mostly Chinese-speaking audience: “I can’t believe we have such conferences on Chinese soil.” Sun has been charged by the US Securities and Exchange Commission (SEC) with fraud, but said the SEC’s charges lacked merit and accused the regulator of targeting crypto players.
“Hopefully one day we will have such events in Shanghai and Beijing,” Sun said.
(Reporting by Josh Ye in Hong Kong; Editing by Brenda Goh and Kenneth Maxwell)
