Cryptocurrencies are a big thing nowadays with more and more nations investing in them. Even if the governmental regulation is not in place yet, these markets are thriving all over the world. One of the places where feel especially positive with regards to cryptocurrencies is Hong Kong. What are the reasons behind their position and why cryptocurrencies remain on the agenda today we will discuss in this article below.
According to the recent study by the Hong Kong Blockchain Association, every fourth person in Hong Kong is going to invest in cryptocurrencies this year. The main reason for this is the upcoming crisis in the financial system worldwide in which such investments would pay off more than any other. Moreover, 25% of respondents state that they will only begin such investments once the crisis actually takes place despite the strong assumptions.
Chinese Regulation Of Cryptocurrency Trade
One of the most discussed issues in China and Hong Kong related to the cryptocurrency trade is the state’s regulations of this activity. More than 60% of interviewees mentioned that cryptocurrency exchanges shall be licensed and regulated so that their activity is transparent and understandable to the larger portion of the population. The best example for the Chinese government to follow in this situation is, according to the respondents, Japan and Singapore.
Here are some of the regulations China has implemented in order to crack down on cryptocurrency activity:
- ban of Initial Coin Offering (ICO);
- discouragement of local exchanges to trade in cryptocurrencies;
- proposals to discourage extensive bitcoin mining;
- introducement of intentions to block domestic access to online platforms and mobile apps that offer exchange-like services for cryptocurrencies;
- allowance to trade only on the over-the-counter markets.
It is hard to explain Chinese politics in this direction, but the cleansing risk from financial markets has been a government mantra for more than two years. Among the main concerns is the thriving grey banking sector, a potential source of unregulated loans to speculators in whatever the latest craze happens to be. Digital currencies also give a way to move money from China to other countries, adding to outflows that government authorities have decidedly set about stopping.
In Hong Kong, however, people manage to avoid the Chinese regulations. Given the relative easiness to start businesses there, companies actively move their assets to the islands. It takes only $1000 to legally start a business, which will allow opening a business account at a Hong Kong bank. That is how Chinese traders were able to bypass strict restrictions at mainland China.
All in all, one of the major reasons for Hong Kongese to continue investing in the cryptocurrencies is assumptions of a financial crisis to break out in 2018. Investments in digital currencies are more likely to save funds and even bring profit. Moreover, Chinese strict regulations regarding a trade of Bitcoin and other currencies play their role in the situation with more and more people wishing these activities to become legalized and properly licensed.