Hong Kong’s ambition to become a crypto hub may not be sustainable, according to a Chinese crypto giant whose digital asset business in China was overturned by a regulatory crackdown.
in one interview with bloombergCrypto pioneer Bobby Lee, who set up China’s first bitcoin exchange and co-founded US-based crypto storage provider Bailey Global, warned that Hong Kong could once again change its attitude towards crypto in three to five years, and the industry may be under pressure. may declare a ban.
the statement comes as hong kong is set to release Crypto exchange licenses are rolling out from next month.
Li claimed that the authorities that allowed exchanges to obtain licenses may have high hopes of connecting to mainland China as digital asset trading is prohibited in China.
“The fantasy for exchanges is thinking that if the authorities let us get a license, maybe they will start a sort of crypto-connected trading link with mainland China.”
He said he is not blaming the Hong Kong government and in the grand scheme of things. “Hong Kong is only a drop in the bucket,” he said.
Hong Kong’s new regulatory regime is set to take effect from June 1
with the Securities and Exchange Board of Hong Kong concluded Its consultation paper on the proposed regulatory regime for crypto trading platforms, which is set to come into effect from June.
Under the new rulebook, city-states will allow retail investors To trade specific “Large-Cap Tokens” on licensed exchanges in the city, given that safeguards such as knowledge tests, risk profiles and appropriate risk limits have been put in place.
The agency will also start licensing crypto exchanges.
However, it noted that licensed platforms “must adhere to robust investor protection measures covering onboarding, governance, disclosure and token due diligence and on-boarding before providing trading services to retail investors.”
The pivot to woo crypto firms is apparently Beijing-backed.
Meanwhile, the new licensing regime is still unclear on how to treat crypto derivatives, cryptocurrencies used for gaming, and utility coins.
Concerns around gray areas as well as the sustainability of the new regulatory framework remain a major concern.
“It is difficult to create a five-year regulatory road map for businesses,” said Lucy Gazmarian, founder of web3 venture fund Token Bay Capital.
“Keep it in the back of your mind, but really plan ahead one to two years – because look what happened in the US with the crackdown on the sector.”
Hong Kong was previously a digital-asset hub but started losing Its position in mid-2022 is considered more favorable for the crypto industry amid growing concern about the city’s regulatory ambiguity over crypto and the emergence of potential rivals such as Singapore and Dubai.