Hong Kong could become a window to the cryptocurrency world for China.
Matrixport experts pointed out that after the Chinese Communist Party Congress, which is held twice a decade, there were signals that Beijing may consider Hong Kong as a “window” to the cryptocurrency world.
The fact that Hong Kong may have a favorable business climate for cryptocurrency business indicates Beijing’s intention to change its viewpoint on cryptocurrencies – this is convinced by the former head of the cryptocurrency exchange BitMEX Arthur Hayes, who recalled that the platform was also born in Hong Kong. Hayes points out that Hong Kong is allowed to have a financial system “in market terms more free and more experimental.”
According to the former head of BitMEX, it was already clear several years ago, in 2017, that “China had all the necessary ingredients to become a global hub for cryptocurrency trading in terms of the scale of such activities, had all the necessary innovations, but at a certain point Beijing decided that the cryptocurrency topic was not part of their development plan.” Recall that in the middle of last year, Beijing took hard stance on bitcoin mining.
Now, however, Beijing may be reshaping its attitude on the cryptocurrency issue, as will be seen by how the cryptocurrency business environment develops in Hong Kong. For Beijing, U.S. policy on U.S. currency is a concern.
As People’s Bank of China advisor Yu Yungding put it:
“We never expected the U.S. to go to the trouble of ‘freezing’ any country’s foreign exchange reserves…. The question now is, in a situation where the U.S. has stopped playing by the rules, what can guarantee the safety of Beijing’s reserves for China? We don’t have an answer to that question right now, but we need to think hard about it.”
In addition to a potential regulatory shift in Hong Kong toward cryptocurrencies, Beijing continues to work actively on the digital yuan (e-CNY), conducting numerous tests of the currency, the essence of which is both to work out all the technical points and to adapt market actors to a future in which digital currencies will be more actively used.
According to a recent report by the Bank for International Settlements in Basel, Switzerland, the People’s Bank of China has successfully completed a six-week test of the digital yuan, which allowed cross-border e-CNY transactions to be tested with digital currencies from Hong Kong, Thailand and the UAE.