Hong Kong is stepping up to regain its crypto hub position as the city relaxes some regulations to make it an attractive destination for crypto investors and companies. Recently, the city’s authorities have declared that it will consider exchange-traded funds (ETFs) and is working on making the city lucrative for retail investors who want to acquire crypto assets.
The current scenario in Hong Kong has proven to be hostile toward crypto companies. Once the city introduced leverage regulations, companies providing crypto services (virtual asset service providers or VASP) were required to obtain licenses to deal with every currency they wanted to deal with. These licenses could cost as much as US$ 10,000 per crypto currency. Besides costing a lot of money, the process was difficult.
This proved to be hostile toward the cryptocurrency service providers in the region. More so because only two service providers, OSL, the crypto exchange run by BC group and HashKey Group were able to secure licenses to continue trading. Thus, other companies feared losing retail investors from their customer base once the rules were widely implemented as the exchanges would be qualified as “unlicensed.”
To add more fuel to this tumultuous situation, China banned all companies, services, and firms that provided cryptocurrency services. Thus, companies and investors feared that Hong Kong would follow suit as several of the city’s politicians believe that Hong Kong is a part of China but with a different governing system.
The restrictions imposed during the Covid-19 lockdowns were the final blow to the city’s scope in terms of scaling up to be a cryptocurrency hub. However, the pandemic is almost over now, and the city has declared that it is back to full business now. But, considering the current relaxation in rules, the future of cryptocurrency in Hong Kong seems bright.