Hong Kong lawmaker invites Coinbase to town.
Hong Kong lawmaker invites Coinbase to town.
The Blockchain Industry in Hong Kong: Reviving Crypto Enthusiasm and Navigating Regulation
Hong Kong, once a flourishing crypto hub, experienced a decline in activity due to the tightening regulatory environment and the fear of a retail investment ban. However, a member of Hong Kong’s Legislative Council (LegCo), Johnny Ng, is working tirelessly to revive the city’s position in the blockchain industry. With the inadvertent assistance of U.S. regulators and his active involvement in promoting digital assets, Ng aims to bring crypto exchanges back to Hong Kong.
Ng, widely regarded as the de facto head of the legislature’s crypto caucus, sent a viral tweet inviting crypto exchanges globally, including Coinbase, to apply for a license in Hong Kong. This move was prompted by Coinbase’s lawsuit with the U.S. Securities and Exchange Commission (SEC), leading to speculation that the company might be searching for a new home. Ng’s efforts to support digital assets have gained traction, evident from Hong Kong Chief Executive John Lee’s speech at the inauguration of the Institute of Web 3.0 Hong Kong, signifying the city’s renewed focus on the blockchain industry.
From Skeptic to Believer
Ng’s journey into the world of cryptocurrencies began when he encountered Bitcoin back in 2011 while working on facial recognition technology. Initially skeptical, it took another six years for Ng to study the Bitcoin white paper, attend meetups, and interact with passionate enthusiasts to truly understand the value and potential of cryptocurrencies. Now a vocal advocate of Web3, Ng actively promotes the adoption and growth of blockchain technology.
Ng’s role in LegCo isn’t his only endeavor; he also co-founded G-Rocket, an accelerator for Web3 startups. Despite his involvement in both the government and the private sector, Ng has meticulously addressed any potential conflicts of interest, declaring his stake and abstaining from voting on Web3-related bills.
New Licensing Regulations
To ensure a regulated and secure environment, Hong Kong has introduced licensing regulations for virtual asset trading services. Exchanges like Coinbase, attracted by the clarity and structure these regulations offer, now have a defined pathway to operate within the system. However, it’s important to note that the scope of accessible coins for Hong Kong residents will be limited to those with significant market capitalization, a 12-month track record, and inclusion in compliant indices.
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Although licensed players have expressed interest in expanding the range of listed coins, Hong Kong is taking a cautious approach by focusing on meaningful volume and gradual progress. Only larger exchanges with the required capital, responsible hiring practices, and experience may obtain licenses, with the intention of ensuring stability within the sector. However, even with the size advantage, Ng emphasizes that no exchange is immune to failure, as seen in recent global cryptocurrency market dynamics.
Beijing’s Long Shadow
While Hong Kong operates under the “One Country, Two Systems” model as an administrative region of mainland China, Ng acknowledges the city’s unique ability to shape its own regulations and policies. However, concerns arise regarding alignment with Beijing’s stance on cryptocurrencies. Ng clarifies that Beijing’s concerns lie more with the speculative hype surrounding the industry than with the technology itself. Recognizing the diversity of China’s population and their differing levels of education, Ng believes that blockchain and Web3 can find support within mainland China.
As part of the Chinese People’s Political Consultative Conference, an advisory body to mainland Chinese government, Ng has submitted proposals on blockchain in 2018 and Web3 in 2021. While awaiting a response from the Chinese government, Ng’s commitment to promoting the benefits of blockchain and Web3 remains strong.
Ng’s advocacy for Web3 stems from his belief in its potential to increase social mobility, particularly for young people. Coming from humble beginnings, Ng’s personal background informs his drive to address social inequality. He remarks on the tradition of wealth passed down through generations and highlights the exclusion of traditionally successful entrepreneurs from the blockchain industry. Ng views blockchain technology as a vehicle for individuals to break free from this cycle.
The Exit Question: Binance and Beyond
While Ng reached out to Coinbase through his viral tweet, he refrained from directly inviting Binance, the largest global crypto exchange. This cautious approach stems from Binance’s less transparent operation and its ambiguous headquarters. Ng emphasizes that his invitation to Coinbase, as a publicly listed company, aims to showcase the competitiveness of Hong Kong’s policies. Moving forward, Ng extends a warm welcome to all exchanges, emphasizing that Hong Kong is open to collaboration with industry players.
In conclusion, Johnny Ng’s determination to revive Hong Kong’s position in the blockchain industry showcases the city’s resilience and adaptability. By navigating regulatory challenges, promoting collaboration, and showcasing the potential of blockchain technology, Ng strives to establish Hong Kong as a prominent crypto hub once again. With a supportive government and a growing ecosystem, the blockchain industry in Hong Kong holds immense promise for the future.