Hong Kong Embraces Web 3.0: Will Asia Bring Crypto Back to Life?
Singapore --News Direct-- Huobi
Hong Kong, the new Promised Land of Web 3.0.
Since the Hong Kong FinTech Week 2022, the city has made a string of pro-crypto moves. It has released the Policy Statement on Development of Virtual Assets in Hong Kong and the consultation conclusion to the discussion paper on crypto-assets and stablecoins, introduced a policy that requires crypto exchanges to obtain a license, and unveiled its plan to allow retail investors to trade cryptocurrencies. In addition to these policy endeavors, it has also established a Web 3.0 base, along with HK$50 million to be pumped into the city's Web 3.0 ecosystem. It is therefore not difficult to tell that Hong Kong is on track to become a global hub for virtual assets.
A Shot in the Arm of Hong Kong's Stablecoin Market
Stablecoins, especially those purportedly backed by fiat currencies, have long been on the radar screen of Hong Kong regulators.
On January 31, 2023, Hong Kong Monetary Authority (HKMA) issued the consultation conclusion to the discussion paper on crypto-assets and stablecoins (the “Consultation Conclusion”), where it proposed to bring stablecoins into the regulatory perimeter based on the feedback it had received, as well as the most up-to-date international advice. According to the HKMA, key activities relating to stablecoins will be subject to a mandatory licensing regime in Hong Kong.
It has also stated that it will first regulate stablecoins pegged to fiat currencies (fiat-pegged stablecoins), as they pose greater and more imminent monetary and financial stability risks; it also envisages a flexible approach in all future regulatory measures, which allows the HKMA to scope in other members of the stablecoin family down the road.
While other crypto players are still waiting in the wings, Huobi has stolen a march with the launch of its offshore Chinese Yuan-pegged stablecoin, TCNH, bringing the first spring breeze to Hong Kong's stablecoin market.
TCNH is a TRON-based stablecoin pegged to the offshore Chinese Yuan at 1:1. The offshore Chinese Yuan, as the name suggests, is traded offshore from mainland China, of which Hong Kong is one of the trading centers. As things stand now, there is still a relatively huge vacuum in the use cases of offshore RMB-pegged stablecoins, especially when compared with their USD-pegged counterparts. Therefore, whoever beats its rivals to the punch is more likely to secure a bigger slice of the emerging market share. Huobi's well-timed launch of TCNH has made its intention to spearhead the Hong Kong crypto market crystal clear.
Analysts noted that Huobi certainly engineered the launch of TCNH, yet there is also no doubt that the crypto exchange will bring new opportunities to its global users in the financial market while bolstering the growth of Hong Kong's crypto market.
Crypto Exchanges' Foray into Hong Kong
In the meantime, more and more digital asset exchanges gravitate toward Hong Kong due to the city's pro-crypto pivot.
Huobi revealed plans to apply for a crypto trading license in Hong Kong and to launch a local exchange named Huobi Hong Kong; Dogecoin exchange is also seeking a permit to expand its services to the city; OKX has a team dedicated to regulatory compliance in Hong Kong; the prices of some "China coins" skyrocketed over the past couple days...
Huobi discerned Hong Kong's prospect of becoming a crypto hub way back before the recent price surges in China-related tokens. As early as in November 2022, Justin Sun, a member of Huobi's global advisory board, openly expressed his confidence in Asian crypto markets, saying that they would recover first and drive the next bull run. Since then, he also remarked many times on the intent of pivoting Huobi to Hong Kong.
As Hong Kong's policy on cryptocurrencies starts to take shape, Huobi sets the wheels in motion to build a presence in the city. According to Justin Sun, Huobi will first apply to become a licensed crypto trading platform in Hong Kong and then establish a new Hong Kong-based exchange to serve customers there. The announcement caused Huobi's native token HT to jump by 19% overnight.
Be it jumping on the bandwagon or moving with well-thought-out plans, industry players are already deeply involved in a regulatory evolution that is reshaping the crypto space.
A Crypto Revival Propelled by Hong Kong
Throughout history, Hong Kong has been where China meets the West. As a gateway to the world, it has a more liberal financial system and is open to experimental policies.
Over 13 tumultuous years of ups and downs, many crypto giants emerged from Hong Kong, including FTX and BitMEX. However, China's crackdown on crypto trading prompted a slew of high profiles to move to other markets, leaving Hong Kong and crypto drifting further apart. The dramatic collapse of the then crypto giant FTX left many in shock and pity. BitMEX, a high-profile exchange that started off in crypto derivatives trading, has seen its C-suites leave amid tightening regulations and gradually faded into insignificance.
Now, the good news is that Hong Kong is returning as a global center of cryptocurrencies.
As BitMEX co-founder Arthur Hayes claimed in a post on Medium, "I believe that the reorientation of Hong Kong as a pro-crypto location is a prong in Beijing’s strategy to reduce its position in a way that won’t destabilize its internal financial system. If these flows actually materialize in the way I imagine, they will be a strong supporting pillar of the next bull market. Imagine a bull market supported by every major central bank engaging in yield curve control and Chinese retail buying Bitcoin in Hong Kong."
According to Justin Sun, Hong Kong's proposed cryptocurrency policies carry significant global importance and are much-needed changes for the crypto industry, which currently lacks endorsement. The new regulatory push by Hong Kong may spur other countries in Asia and America to follow suit, as the lack of regulatory clarity has been the biggest obstacle to developing the blockchain industry in Asia. A sound legal framework that can protect investors' interests and build trust is critical for the development of cryptocurrencies and blockchain in Asia and the rest of the world, as Sun argued.
About Huobi Group
As a world-leading company in the blockchain industry, Huobi Group was founded in 2013 with a mission to make breakthroughs in core blockchain technology and integration blockchain technology with other industries. Huobi Group has expanded into public blockchains, digital assets trading, wallets, mining pools, proprietary investments, incubation, digital asset research, and more. Huobi Group has established a global digital economy industry ecosystem by investing in over 60 upstream and downstream companies in the blockchain industry.
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