Is Another Bitcoin and Ethereum Pump Around the Corner as China Secretly Pushes into Crypto Hub Hong Kong?
- Reports suggest China has secretly backed Hong Kong’s ambitions to become Asia’s crypto hub.
- Officials from mainland China have been visiting Hong Kong to see developments in the region’s crypto landscape.
Bitcoin and the broader cryptocurrency market staged a strong comeback last week, adding over $2.1 trillion to investors’ fortunes. As of press time, Bitcoin is trading at $24,645 with a market cap of $475 billion. Currently, $25,000 is the crucial resistance level for BTC and it is important to rise past this level to continue the upward momentum.
The latest developments suggest that China is getting back into the crypto game through the Hong Kong route. Earlier this week, reports emerged that Hong Kong plans to allow retail traders to trade major cryptocurrencies such as Bitcoin and Ethereum.
In its consultation note on Monday 20 February, the Securities and Futures Commission (SFC) spoke about this development of retail participation. It also noted that they have provided safeguards such as knowledge tests and risk profiles. Moreover, they have also kept reasonable limits of exposure. If true, this would mean a massive influx of liquidity in the crypto space.
Another report shows that Beijing is providing under-the-radar support to Hong Kong’s crypto ambitions. Sources familiar with the matter said representatives from China’s Liaison Office have been frequent guests at Hong Kong’s crypto gatherings in recent months.
Officials from mainland China have checked developments, requested reports, and made follow-up calls. Local crypto operators also stated that the presence of officials from mainland China removes doubts about Beijing’s stance on Hong Kong’s crypto ambitions.
Using Hong Kong as a test area
While China continues to maintain a strict crypto ban on the mainland, it appears to be using Hong Kong as a testing ground to re-enter crypto. Companies from mainland China and overseas jurisdictions are planning a return to Hong Kong. Nick Chan, a member of the National People’s Congress and a lawyer who advises on cybersecurity and digital assets, told Bloomberg:
“As long as the bottom line is not violated, so as not to threaten China’s financial stability, Hong Kong is free to explore its own pursuit under ‘One Country, Two Systems.’
However, it would be too early to say that Beijing might relax its crypto rules anytime soon. But Hong Kong’s renewed interest in crypto has surprised many and comes at a time when regulators are tightening their grip on the crypto market in popular markets such as the US and Singapore.
Crypto exchange Huobi Global is now seeking a license to offer crypto trading services in Hong Kong. It also plans to set up a local exchange in Huobi Hong Kong to serve institutional investors from the region. during the interview last month, Huobi CEO Justin sun said:
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“The changed stance of the Hong Kong SAR government on crypto signals a nod from the Chinese central government giving pilot status to HK for some forward-looking experiments on how crypto can best be adopted and localized for the vast Chinese market at large. I am very optimistic about on the outlook for crypto in the greater China region for the next decade.”
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