On June 26, the mainstream American political media "Politico" published an article focusing on China's blockchain. In the past, relevant media rarely paid attention to this aspect, which shows that the influence of China's blockchain is increasing.
The article discusses China’s desire for blockchain and how Hong Kong fits into the broader strategy as it solidifies its position as a digital asset hub.
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In the race to control blockchain, China has several ways to win.
As the world's largest financial powerhouse, the United States, continues to consider its approach to cryptocurrency regulation, with the House Financial Services Committee expected to consider a bill next month, financial centers such as London, Dubai and Singapore are also trying to establish themselves as alternative cryptocurrency hubs. However, due to the existence of Hong Kong, China is taking two approaches to cryptocurrency at the same time.
On the mainland, Beijing has banned global crypto networks while developing and promoting more versions of next-generation currency technology to provide the Chinese government with greater control. But through the special administrative region of Hong Kong, Beijing has also been able to carve out a niche in the laissez-faire global digital asset market that competes with other free-market financial centers. Despite being denominated in U.S. dollars, Tether, the world's most popular stablecoin, is owned by a Hong Kong company. Heading into summer, the cryptocurrency action in the region is heating up.
Earlier this month, the Beijing-based, majority-state-owned Bank of China issued $28 million in debt on Ethereum through its Hong Kong investment arm. The move allows the government to use open blockchain networks for its own purposes without having to give up control over the financial activities of ordinary citizens.
Also this month, the Financial Times reported that Hong Kong regulators are pressuring the region’s largest banks to provide banking services to cryptocurrency exchanges — upending the status quo of many U.S. banks’ reluctance to accept cryptocurrency clients due to the industry’s uncertain legal status. This morning, Hong Kong-based independent journalist Colin Ng reported that HSBC, the region’s largest bank, has begun offering Bitcoin and Ethereum ETFs to clients. Representatives for the bank did not immediately respond to a request for comment. In effect, Hong Kong’s presence allows China to impose internal financial controls on the mainland while hindering capital outflows betting on the potential of global crypto networks to disrupt money and finance.
Inside China, Beijing will be able to keep the world’s largest population and second-largest economy running on financial networks it designs and controls (and push trading partners to join them) — without having to abandon its ambitions to make China a player in the messier crypto networks used elsewhere. “They still see the value in this. You just can’t do it in countries where capital is tightly controlled,” said Sean Lee, founder of Hong Kong crypto startup Odsy and adviser to the Crypto Council for Innovation trade group — who described Hong Kong’s role in China’s response to cryptocurrencies as a natural extension of its existing role as an international financial center. “They always need a place where capital can flow in and out.”
(AI translation)
