Hong Kong is known as a hub of digital assets given the installation of several projects in the city. However, since the arrival of Covid-19, restrictions have been put in place limiting the activity of companies in the sector. Two years after the start of the pandemic, these restrictions are still applied, pushing players to move to other cities with more favorable regulations such as Singapore.
In view of this loss, investors and entrepreneurs based in Hong Kong have stepped up to the plate. They ask for support from the political authorities to remove the ambiguity that plagues the sector.
Investors want to retain Hong Kong’s fame as a crypto hub
Previously established in Hong Kong, crypto companies are increasingly exiled to other destinations. The reason for this exodus is the ambiguity of the regulations concerning crypto-currencies.
This is denounced by entrepreneurs and investors who are nostalgic for the time when the city was attractive. According to Padraig Walsh, a partner at Hong Kong-based law firm Tanner De Witt, the city was seen as a leader in crypto-related business. However, this posture has disappeared over time due to unfavorable regulation.
Many crypto companies are relocating their headquarters because of this unfavorable regulation for destinations like Dubai or Singapore. The symbol of this decline is the holding of the Token2049 conference in Singapore. This event, which was held every year in Hong Kong before the health crisis, has also packed its bags.
Yang He, CEO of a crypto-asset management company named Aspen Digital regrets the departure of crypto industry players. He points to the lack of clarity and dynamism in the authorities’ decision.
These various entrepreneurs and players in the cryptographic sector based in Hong Kong are hoping for a quick and effective response from the authorities to restore the image of the city.
The regulations are considered too heavy
The cause behind the departures of crypto companies is believed to be Hong Kong’s new anti-money laundering law. Indeed, the city has set a regulatory framework in which digital currency trading platforms must operate with a compulsory license.
Also, only professional investors can access the services of these companies. By professional investors, the regulator means investors with a minimum portfolio of 8 million Hog Kong dollars, or $1 million.
While the administration tries to justify this as a prudent move given the high risk this asset class represents, not everyone hears it that way. Some players find that limiting trading to professional investors has played a significant role in the departure of crypto businesses. The administration would be too heavy-handed and would benefit from lightening this law.