Hong Kong Rolls Out Red Carpet to Crypto Firms Including Mainland China

Reuters | Josh Ye | Apr 13, 2023

After years of bankers quitting Hong Kong amid a China security crackdown and tight COVID curbs, the city is rolling out the red carpet to a finance sector tarnished by events elsewhere in a bid to bolster its status as a finance hub – cryptocurrencies.

See: Hong Kong: Pivoting to Legalize Retail Crypto Trading and Grow the Ecosystem

While scandals and high-profile bankruptcies have prompted some governments to distance themselves from the cryptocurrency industry, Hong Kong is pulling out all the stops to court mainland China crypto companies to rebase in the city. Mainland China banned cryptocurrency trading in 2021.

Top government officials, such as Hong Kong chief executive John Lee, are touting their support and the city is scheduled to hold 100 crypto-related conferences and lavish parties through April.

The Hong Kong government “is very serious about building an international virtual asset centre”, 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 biggest conference of the month, on Wednesday.

The Hong Kong government is emphasizing that it practices different laws from mainland China under the “One Country, Two Systems” framework, which has made some in the crypto industry optimistic about the possibility of a stable regulatory regime on cryptocurrencies.

See:  Kaiko CEO Predicts Hong Kong as the Next Crypto Hub Due to US Crackdown

Read:  Hong Kong Publishes Virtual Asset Trading Platform Rules for Comment

However, some investors remain sceptical as China’s crypto ban still looms large in the background. Nonetheless, at least 10 crypto companies with Chinese founders have announced or are planning to announce their bid for licenses in Hong Kong, and these firms are among the sponsors of the glitziest Hong Kong parties this week.

Justin Sun, speaking at an event mainly for Chinese speaking audience:

I can’t believe that we are having such conferences on Chinese soil.” Sun has been charged by the U.S. Securities and Exchange Commission (SEC) with fraud, but said the SEC’s charges lacked merit and accused the regulator of targeting crypto players.

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