Hong Kong Continues Taking Regulatory Action, Hopes to Become International Blockchain Hub

Hong Kong continues to nurture financial, cross-border initiatives powered by blockchain, steadily gaining a reputation for being an important international blockchain hub.

The city does not inherit the Chinese approach towards crypto, and the infamous ICO blanket ban in September 2017 bypassed Hong Kong.

Around the same time, in September 2017, the government of Hong Kong showed its support for blockchain, outlining its considerably more positive position towards crypto in comparison to mainland China.

"Blockchain is a very high priority for us. There is hype, and there is the fast grab of money with ICOs in some cases. But what we are looking at building here in Hong Kong is an infrastructure for new businesses and existing businesses, to make sure the technology and innovations remain a key enabler for financial sector growth."

Blockchain has enjoyed more presence in the country, as on June 25, Alibaba subsidiary Ant Financial tested its first blockchain remittances, sending a funds transfer between its AliPayHK app in Hong Kong and Filipino payment app GCash, its joint project with local telecoms company Globe Telecom.

Around the time when the Chinese authorities implemented a blanket ban on ICOs, Hong Kong regulators showed a more cautious approach.

Namely, the watchdog claimed it had sent warning letters to seven crypto exchanges either based in Hong Kong or connected to the city, stating that they should not trade virtual currencies without a licence.

On April 30, the Hong Kong Financial Services and Treasury released a report on the status of money laundering and terrorism financing which concluded that virtual currencies are not particularly involved in either type of financial crime, giving it a "Medium-low" level of risk.

Although the prospects of holding ICOs in Hong Kong has become more blurry due to the abovementioned SFC's sentiments, Hong Kong's stock exchange seems to attract mining players as large as Canaan Creative and Bitmain, who have expressed their interest in holding an Initial Public Offering there.

On May 16, Bloomberg reported that Chinese Bitcoin mining hardware manufacturer Canaan Creative, who holds around 15 percent of the Bitcoin chips and hardware equipment market and "a quarter of the world's Bitcoin blockchain computing power," confirmed that it was planning an IPO on the Hong Kong stock exchange.