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Hong Kong last week greenlit digital asset trading for retail investors in a move that appears to be an attempt to rebrand the city as a crypto hub.
Does this now mean that China—a country notorious for cracking down on crypto—has now changed course and reopened up to the world of Web3 and Bitcoin?
“Bullshit,” according to one expert who spoke to Decrypt.
Sean Lee, Co-Founder of Odsy Network and a senior advisor at the Crypto Council for Innovation, told Decrypt that despite being a special administrative region of China, the world’s second largest economy would not be opening up to crypto just yet.
“Like everybody is saying China’s warming up to crypto,”Lee said. “Like that’s bullshit. That’s a big ass no.” He added that Beijing’s recent local government Web3 whitepaper also wasn’t necessarily a move towards a crypto-friendly China either.
Hong Kong was a big crypto hub years back, with major digital asset exchanges such as Binance, Bitfinex and FTX basing their operations there. But that changed following China’s strict COVID-19 lockdowns and regulatory crackdowns—which scared many crypto startups away.
Now, Hong Kong is allowing retail investors to trade crypto under a new set of strict rules which asks crypto companies to comply and register with the Securities and Futures Commission (SFC).
This led some—including Huobi advisor and crypto mogul Justin Sun—to say that China would be opening up to digital assets too as it controls Hong Kong.
But China has some of the world’s strictest crypto rules—its government banned digital asset trading and mining back in 2021.
Lee did add this would be a testing ground for China.
“[Hong Kong’s new policy] does not mean China now gets access to or is opening up to crypto. Now what it does mean is that Hong Kong is a regulatory sandbox for China.”
Lee added that Hong Kong’s move was good for the city and the continent as a whole in attracting crypto investment. He added that the “goal is never retail per se,” but rather the ideal situation is for institutions to get involved—and if big players then create products that can be sold to retail investors, that “changes the game.”