TLDR
- Experts are calling for closer collaboration between Hong Kong and mainland China to enhance the crypto sector.
- Hong Kong had become a significant crypto hub after passing the Stablecoin Ordinance in August 2023.
- Despite China’s crypto ban, the country is exploring ways to collaborate with Hong Kong in digital asset development.
- Industry leaders emphasize the need for collaborative efforts in developing standards and regulations for the cryptocurrency market.
- Chinese firms are interested in applying for a Hong Kong-issued stablecoin license despite government warnings.
Industry experts are urging Hong Kong and mainland China to collaborate on advancing the cryptocurrency sector. A recent report from the South China Morning Post highlights that collaboration between the two regions could significantly boost the crypto and financial technology industries in Asia. According to experts at the 11th Global Blockchain Summit in Shanghai, joint efforts can benefit both markets.
Hong Kong’s Role in Crypto Growth
Despite China’s ban on cryptocurrencies since 2021, Hong Kong has continued to embrace the digital asset sector. The region has become a crypto hub, particularly after the passage of the Stablecoin Ordinance on August 1. Investor interest in stablecoins has surged since the law was enacted, making Hong Kong a key player in the crypto market.
Hong Kong has seen significant growth in its crypto ecosystem. The government’s focus on digital assets has helped attract investment and innovation. As a result, Hong Kong continues to strengthen its position as a global leader in the blockchain and crypto sectors.
However, China’s stance on cryptocurrencies remains cautious. While China’s government has prohibited crypto trading, it has allowed Hong Kong to explore digital assets. This unique arrangement allows Hong Kong to develop its crypto industry while China focuses on digital payments and artificial intelligence.
Collaboration Between Hong Kong and Mainland China
Industry leaders emphasize the importance of greater cooperation between Hong Kong and mainland China. Xiao Feng, Chairman of Wanxiang Blockchain and Hashkey Group, urged for the creation of more standards and regulations. He believes that such efforts will allow both regions to keep up with the rapidly evolving blockchain technology.
Xiao noted that the hype around crypto is growing, as seen by the sold-out tickets at the Global Blockchain Summit. “Blockchain technology has moved from the initial stages of development to large-scale applications,” he said. He further expressed hope that both regions could unite their strengths to foster a thriving digital assets ecosystem.
Hong Kong-based Cyberport also expressed its desire for stronger ties with mainland China. Rachel Lee, Director of Blockchain and Digital Assets, emphasized the need for collaboration with Chinese stakeholders. In 2023, Cyberport received $50 million from the Hong Kong government to support the growth of the crypto sector.
Potential for RMB-backed Stablecoins
Despite Hong Kong’s progress, experts believe both regions can still improve their standing in global crypto rankings. According to Chainalysis, Hong Kong and China rank 17th in terms of crypto adoption, lagging behind countries such as India, Japan, and Vietnam. China’s push for yuan-pegged stablecoins has led some to reconsider the ban on crypto trading.
Chinese firms have shown interest in applying for a Hong Kong-issued stablecoin license. However, government warnings have caused some to pause their plans. Some regulators in China have recently called for a relaxation of the crypto ban in light of advancements in stablecoin technology.
A recent document from the Hong Kong Legislative Council hinted at future collaboration with mainland China. The bulletin mentioned Hong Kong’s interest in exploring the issuance of offshore Renminbi-backed stablecoins. This initiative could further strengthen Hong Kong’s position as a leading hub for digital assets and Web3 innovation.
Issuing RMB-backed stablecoins could benefit both Hong Kong and mainland China. It would help Hong Kong solidify its role in the global crypto market. At the same time, China could leverage the stablecoins for cross-border trade and reduce its dependency on the U.S. dollar.
