Businesses interested in virtual assets have begun looking to Hong Kong as the city aims to recover its role as a global crypto hub with a more flexible regulatory stance.
Hong Kong’s Crypto Business Draws 80+ Companies
Christian Hui, Hong Kong’s Secretary for Financial Services and the Treasury, recently stated that 80 crypto-related companies had shown interest in opening in the city since October 2022.
The interested businesses include:
- Trading platforms for virtual assets
- Blockchain-based infrastructure company
- Storage services for digital currencies
- Banks and other financial institutions
- Additional Web3-related initiatives
Most of these companies are in China, although several are from the EU, Canada, Singapore, the UK, and the US.
Hui believes these firms want to know more about the policy statement’s specifics, such as the regulations that must be followed, the visa criteria that must be completed to bring in talent, and the actions that must be taken to assist the virtual assets and Web3 industry.
Increased curiosity was seen after Hong Kong’s October 2022 announcement of its stance on creating virtual holdings.
Hong Kong Poised to Reemerge as a Global Crypto Center
At one point, Hong Kong was the global center of the crypto industry. However, by mid-2022, it had begun to lose ground to other, more crypto-friendly cities such as Singapore and Dubai. The city, however, has recently taken a more welcoming tone to lure crypto firms back.
In February, the SFC released a consultation document outlining its proposed regulatory framework for crypto trading platforms. All crypto exchanges will need to obtain an SFC license come June when the new regulations go into effect. Under specific conditions, including knowledge exams, risk profiles, and reasonable exposure limitations, the regulator also stated that ordinary investors could trade some “large-cap tokens” on approved exchanges.
The Hong Kong government had previously permitted the public to purchase shares of exchange-traded funds (ETFs) that held futures contracts for Bitcoin and Ether from CME Group.
Hui stated, “We put significant emphasis on the virtual asset (VA) and Web3,” which he attributed to Hong Kong’s potential to become a key hub for Web3 in Asia and beyond. He also mentioned the HK$50 million ($6.4 million) allocated in the city’s budget this year to help develop the Web3 industry.
Final Thoughts
Hong Kong is positioned to become a global leader in the cryptocurrency industry. The city’s business-friendly environment and policy backing are particularly enticing to companies looking to grow into Asia and beyond. There is a clear trend toward Hong Kong once again becoming a dominant hub for the crypto industry as the number of virtual asset-related businesses relocating there rises.