Crypto developments in Hong Kong do not mean China has softened or will soften its approach to regulating Bitcoin.
Despite Hong Kong steadily progressing with cryptocurrency adoption, mainland China has not changed its anti-crypto stance in terms of local regulations.
Some Chinese state-affiliated banks have increasingly 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.
All these developments don’t mean that China has softened or will soften its approach to regulating Bitcoin (BTC) anytime soon, according to CPIC Investment Management CEO Chenggang Zhou.
“The Hong Kong government tries very hard to promote Web3 and crypto, but it doesn’t imply any changes in mainland regulatory regulations or the Chinese government’s attitude toward crypto,” Zhou said in an interview with Cointelegraph on May 5.
Zhou emphasized that despite China government’s backing, CPIC Investment Management operates as a Hong Kong entity regulated by the Securities and Futures Commission.
“Hong Kong regulations allow us to invest in different markets or asset classes or products like cryptocurrencies, so we’re not breaching any regulations or laws,” the CEO said. He added:
“We got involved in crypto because Hong Kong regulations allow us to do that. But it’s in no way any indication of the China government’s attitude or policy, or change of policy.”
China has maintained its anti-crypto stance for a long time, even before banning crypto entirely in September 2021, Zhou noted. He said that he doesn’t expect the local government to change its crypto policies in the foreseeable future.
The CEO isn’t alone in thinking that China remains and will remain anti-crypto while trying to beef up Chinese bank deposits with crypto accounts.
“Given that the Chinese government is coming down hard on the financial sector, it is hard to imagine that China is loosening its control over the ability for Chinese nationals to use crypto,” Lesperance & Associates founder David Lesperance told Cointelegraph.
According to Lesperance, 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 noted 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.
CPIC’s 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.