Despite Hong Kong making strides in cryptocurrency adoption, mainland China has not changed its anti-crypto stance in terms of local regulations. Chinese state-affiliated banks have opened bank accounts to serve crypto clients in Hong Kong. CPIC Investment Management, a China government-backed firm regulated as a Hong Kong entity, even launched two cryptocurrency funds in April. However, these developments do not indicate that China has softened or will soften its approach to regulating Bitcoin anytime soon, according to CPIC Investment Management CEO Chenggang Zhou. He emphasized that despite China government’s backing, CPIC Investment Management operates as a Hong Kong entity regulated by the Securities and Futures Commission.
Zhou mentioned that China has maintained its anti-crypto stance for a long time, even before banning crypto entirely in September 2021. He said that he does not expect the local government to change its crypto policies in the foreseeable future. Lesperance & Associates founder David Lesperance shares the same opinion as Zhou, stating that China wants to increase its foreign currency deposits, whether that is fiat to purchase crypto or crypto itself. “They are bifurcating the markets to shut out domestic Chinese customers but attracting foreign customers,” he noted. The lawyer also pointed out that the crypto market in mainland China is “still effectively shut down.” That raises enforcement concerns about Chinese clients getting a chance to use Hong Kong exchanges to get money out of China. “Certainly, the authorities will try to stop this leakage,” Lesperance noted.
Zhou also mentioned that crypto exchanges in Hong Kong have strict Know Your Customer policies, which aim to restrict mainland Chinese investors on their platforms. “I don’t expect any licensed crypto exchanges in Hong Kong to accept onshore mainland citizens to trade in the exchanges,” Zhou stated. Despite the restrictions, Hong Kong has been making progress in cryptocurrency regulation. In February, the Hong Kong government proposed new regulations for cryptocurrency exchanges, including a licensing system and anti-money laundering requirements. Additionally, in May, a Hong Kong court ruled that cryptocurrencies are property, providing legal clarity for investors and businesses in the city.
In conclusion, while Hong Kong is moving forward with cryptocurrency adoption and regulation, mainland China remains anti-crypto and has not shown any indication of changing its stance. Despite Chinese state-affiliated banks opening bank accounts to serve crypto clients in Hong Kong and CPIC Investment Management launching two cryptocurrency funds, this does not mean that China has softened or will soften its approach to regulating Bitcoin anytime soon. Crypto exchanges in Hong Kong have strict Know Your Customer policies, which aim to restrict mainland Chinese investors on their platforms, and licensed crypto exchanges in Hong Kong are not expected to accept onshore mainland citizens to trade in the exchanges.