Last updated on April 3rd, 2023 at 11:48 am
U.S. Crackdown Cryptocurrency Hong Kong – A WSJ report claims that Hong Kong’s efforts to attract cryptocurrency companies are aided by American regulators’ escalating crackdown. With the heightened focus on the use of digital assets for illegal activity and a crackdown on unregistered securities offerings, the US government has recently adopted an aggressive attitude toward regulating the crypto business.
Several cryptocurrency businesses have been compelled to think about moving to more advantageous jurisdictions as a result. However, one place that has become a possible destination for these businesses is Hong Kong. In recent years, China has made steps to establish itself as a center for bitcoin and blockchain innovation. Hong Kong has long been a hub for banking and technology in Asia.
The Surge in Hong Kong’s Cryptocurrency Sector
Hong Kong’s road to dominance in the global cryptocurrency market has not been easy. Several well-known companies once called the city home, including Crypto.com, BitMEX, and the insolvent FTX. However, a sizable number of businesses departed the sector as a result of Singapore’s escalating competitiveness, worries about China’s tight crypto rules, and Hong Kong’s protracted and strict response to Covid-19.
Hong Kong has recently committed to resuming some of this activity, in opposition to the United States. The largest cryptocurrency exchange, Binance Holdings Ltd., and other exchanges have been sued by U.S. regulators, who have also restricted access to cryptocurrency products and services, targeted banks that support cryptocurrencies, and filed civil lawsuits against celebrities who are accused of endorsing digital assets.
Plans for Hong Kong’s global crypto dominance are currently under work. The Hong Kong Securities and Futures Commission (SFC) of Hong Kong reportedly put forth a new licensing scheme based on investor protection in February. At a press conference, a senior official added that the regulator wanted to prevent a repetition of the problems that brought down FTX and other fraudulent activity.
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Cryptocurrency Companies Set Their Sights on Hong Kong
More than 20 cryptocurrency and blockchain businesses from Singapore, Canada, Europe, and mainland China have notified the government that they plan to open offices in Hong Kong. At the same time, over 80 companies have shown interest in operating a crypto business in the city, according to government statistics.
The Dubai-based cryptocurrency exchange Bybit announced that Hong Kong would be the home of its main Asian operations. A section of its marketing and research and development teams will be based there. The 2018-founded exchange plans to apply for a license in Hong Kong in compliance with the planned regulations that go into effect in June.
The viability of operations in Hong Kong as well as the expense of getting and maintaining permits have been questioned by other enterprises. The city’s planned rules for centralized exchanges and retail trading have drawn criticism for being overly cautious. Others are waiting to see if exchanges can only serve the limited market of local inhabitants until the securities regulator finishes up its guidelines.
The Shanghai-based LD Capital cryptocurrency investment firm, which is now based in Singapore, intends to move its headquarters to Hong Kong this year due to the city’s talent pool, more developed secondary market, and financial market infrastructure. She claims that the fund is collaborating with recruiters in Hong Kong to hire local traders, and professionals in investor relations, and compliance.
The Future of Cryptocurrency in Hong Kong