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Hong Kong could become the hub for digital assets trading from mainland China

Cryptocurrency companies are rushing to Hong Kong in the hope that the city’s high-profile push to become a hub for digital assets will help them to capture demand from mainland China to buy and sell tokens.

Hong Kong is perceived by some companies to be more crypto-friendly than rival Singapore, which cracked down on the sector last year after several high-profile collapses in the industry. The city is planning a new regulatory regime for exchanges and legalizing crypto trading for retail investors.

Businesses expanding in Hong Kong are hoping to tap soaring demand to trade digital coins from mainland China, which remains the world’s fourth-largest crypto market despite Beijing’s 2021 ban against the sector.

“A lot of the Chinese capital is looking for smarter, safer ways to invest . . . being in Hong Kong naturally makes more sense than anywhere else,” said Henry Liu, chief executive of crypto exchange BTSE, which this month said it intended to apply for a license in the city.

Other companies that plan to establish or expand their presence in Hong Kong include exchanges KuCoin, Gate.io, and Huobi, which announced plans in February to move its headquarters from Singapore. Binance, the world’s largest crypto exchange, which was founded in China, is now advertising several Chinese-speaking positions in Hong Kong on LinkedIn. The group said it believed the city had “a competitive position when it comes to . . . the business environment”.

The expansion of crypto companies reflects their growing optimism that Hong Kong will offer a pathway for them to gain legal access to the Chinese market, with regulatory approval from a top-tier financial hub. In their thinking, Hong Kong’s easing was probably approved by Beijing.

“Chinese blockchain companies are very bullish on Hong Kong,” said Cyrus Ip, partner at Hong Kong-based web3 investor Newman Capital.

He said some mainland traders used VPNs to evade Chinese controls but still faced difficulties turning their crypto profits back into sovereign money. It is possible to change crypto to hard currency in Hong Kong.

Source:

  • https://www.ft.com/content/84454295-0273-45fe-8199-bb520bfc81c4