Hong Kong Moves Toward Crypto Legalization With Soft Backing From Beijing

China has been against traditional cryptocurrencies for years, to the point where it is impossible to legally use cryptocurrencies in the country in any way. He even brought regulations and laws that made it impossible for Bitcoin miners to continue operating in the country.

However, as Hong Kong prepares for a consultation process that could possibly lead to the legalization of some form of retail crypto trading, Beijing does not appear to be opposed. Quite the contrary, in fact, as the mainland government seems to be subtly supporting this idea.

***ONLY IN***🚨-Hong Kong #Crypto Hub Ambitions wins quiet backing from Beijing as Asia narrative heats up #Bitcoin #ETH

— Cryptomacro (@cryptomacro14) February 21, 2023

Beijing officials in Hong Kong have been visiting crypto events

Recent reports have suggested that some of the Chinese Liaison Office officials have visited crypto meetings in Hong Kong multiple times. So far, the tone of the visits has been reported as friendly, as have follow-up calls from certain projects.

Chinese officials, including Liaison Office representatives, have attended crypto meetings in Hong Kong and have shown friendly interest in the developments. The move suggests Beijing’s quiet support for Honk Kong region crypto hub ambitions.

—TheCryptoBasic (@thecryptobasic) February 21, 2023

While this is not an open endorsement of Hong Kong’s development in terms of cryptocurrency, some stakeholders have seen it as such. It could mean that Beijing has no problem with Hong Kong’s attempt to become a crypto hub, as it is using its own separate legal system. Also, this could work well for China, as Hong Kong could serve as a testing ground for certain aspects of cryptocurrency adoption.

After all, China used Hong Kong like this in the past, as it was the country’s first taste of open markets in the 20th century. National People’s Congress member Nick Chan, who is also a well-known crypto lawyer, said that ‘as long as one doesn’t violate the bottom line, so as not to threaten financial stability in China, Hong Kong is free to explore its own search under’ One country, two systems”.

Hong Kong is making moves to become a crypto hub

Yesterday, February 20, Hong Kong’s securities regulator, the SFC (Securities and Futures Commission) made its first move to introduce a legal form of retail cryptocurrency trading. Initiated a consultation process for VASPs (Virtual Asset Service Providers), seeking to obtain a license to provide business services for retail. There are numerous requirements involved, as proposed by the SFC, and some of them involve things like a due diligence process on digital assets before they are listed on trading platforms.

This would result in only pre-approved cryptocurrencies being available to digital currency traders. Another requirement would be to establish a risk profile for users, so that their exposure would remain within acceptable and “reasonable” amounts.

Furthermore, it is worth mentioning that the SFC has concluded a multi-year consultation process, which will allow authorized exchanges to serve expert investors. This includes investors with a net worth of more than $1 million, and should start on June 1 of this year.

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