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Hong Kong has an on-again-off-again relationship with crypto: Earlier than China outlawed all crypto-related actions in 2021, the Asian monetary hub was the early residence to a number of crypto startups, together with the now-defunct FTX, which left for the Bahamas after the ban. Now, Hong Kong is once more welcoming crypto companies, solely this time with extra regulatory readability.
Throughout its government-backed fintech week late final yr, Hong Kong indicated its intention to legalize crypto retail buying and selling and introduce a licensing regime for digital asset suppliers. The plan took extra form in February when town revealed draft guidelines that may permit particular person buyers to commerce sure main cryptocurrencies beginning June 1.
Corporations are already responding to town’s shift in angle. As of February, the division for overseas direct funding had acquired “expressions of curiosity” from over 80 digital asset-related corporations from each mainland China and overseas in establishing a presence in Hong Kong. KuCoin, one of many world’s largest crypto exchanges, already stated final yr that it might open an workplace within the metropolis.
Whereas these developments are encouraging indicators to some, others query whether or not the semi-autonomous area has the fitting situations for constructing all types of web3 organizations and companies to thrive. The early consensus is that crypto-trading-related corporations will in all probability be the primary to reap the fruit of the coverage change.
Too large to overlook
When Hong Kong was handed again to China in 1997, Beijing established a “one nation, two programs” regime that granted town a excessive stage of autonomy within the authorized, financial and social realms. Export-oriented Chinese language corporations started utilizing town as a logistics and clearing middle, and multinationals arrange outlets there as their gateway into China.
Lately, nevertheless, Hong Kong is more and more shedding its attract as a springboard connecting China and the skin world after episodes of political fallout and stringent COVID controls.