Topics
Latest
AI
Amazon
Image Credits:Getty Images
Apps
Biotech & Health
Climate
Image Credits:Getty Images
Cloud Computing
Commerce
Crypto
Enterprise
EVs
Fintech
Fundraising
Gadgets
punt
Government & Policy
ironware
layoff
Media & Entertainment
Meta
Microsoft
Privacy
Robotics
security department
societal
Space
inauguration
TikTok
Transportation
speculation
More from TechCrunch
Events
Startup Battlefield
StrictlyVC
Podcasts
video recording
Partner Content
TechCrunch Brand Studio
Crunchboard
Contact Us
With U.S. regulator continuing to ramp up their scrutiny of crypto , startup and founder in the space are looking oversea to find friendlier climates to support their ontogenesis .
One such goal is Hong Kong , which , seek to restitute its status as afinancial hub , is banking on favourable crypto rule to puff a saucy raft of enterpriser , engineer and investors . So far , its strategy seems to be working .
In mid - April , Hong Kong ’s annual web3 festival drew in over 50,000 attendee . There were noticeably more non - Taiwanese attendees compare to last year , when the issue sense like a gathering ofcrypto refugees fleeing mainland China ’s restrictive policy . At this yr ’s version , buttoned - up officials from the city listened attentively to scruffily dressed founders battling jetlag . While she did not make it to the event in person , Cathie Wood , the billionaire founder of Ark Invest , delivered a speech via telecasting . And Vitalik Buterin , the nomadic founder of Ethereum , made a last - moment appearance .
It evoked a common sense of déjà vu : In the diligence ’s early childhood , Hong Kong was a major hub for crypto firms hunt down by foreign entrepreneurs , including the likes of FTX , Crypto.com and BitMex . Like other jurisdictions around the world , the metropolis clamped down on crypto activities to safeguard investor interest as market unpredictability was spiraling out of control .
These moves are in utter contrast to the U.S. government’stough stance against crypto businesses . attender at the web3 festival , who flew in from the U.S. , Europe , the Middle East , India and other regions , expressed their optimism about the momentum in Hong Kong . First Digital ’s FDUSD , issue under Hong Kong ’s digital asset rule and back by U.S. Treasury handbill , for example , has apace become the world ’s fourth - largest stablecoin by securities industry capitalisation .
At the same time , people are mindful of Hong Kong ’s limitations as an aspiring crypto hub . For one , it ’s a comparatively small market of seven million multitude , and mainland China ’s enormous marketis going to be off - limit for now at least . Moreover , the rule prioritize investor protection , which can result in high deference costs and discourage those who favor a more freewheeling surround .
Join us at TechCrunch Sessions: AI
Exhibit at TechCrunch Sessions: AI
Still , Hong Kong rest one of the few jurisdictions , alongside countries like the United Arab Emirates , Japan and Singapore , that have testify a clear commitment to cryptocurrency . As Jack Jia , head of crypto at global payments company Unlimit , remarked : “ The fact that Hong Kong is coming up with any crypto rule at all , just from a reputation and optics viewpoint , will pull everyone . ”
Open-minded officials
Hong Kong does n’t really have the most lenient crypto regulation . Indeed , its scrutiny over exchange operators has pushed its crypto posterchild , HashKey , toseek a license in Bermuda . The world ’s big crypto exchanges , namely Binance , Coinbase and Kraken , areconspicuously absentfrom the list of 22 applicants for the metropolis ’s virtual asset commutation license .
As it turn out , Hong Kong ’s great allure is its attempt to provide regulative uncloudedness for crypto natural action .
“ The SEC is ill-famed . ‘ Everything ’s a security , but we ’re not going to tell you clearly what certify you need to apply for , and then we might just reject your software anyway , ’ ” said Jia , describing the attitude of the U.S. Securities and Exchange Commission in regulating crypto firms . “ There ’s no set SEC unconscious process . But Hong Kong regulator have put out a process for hearing your opinion . ”
Indeed , multiple crypto executive director told TechCrunch that they have held unopen - door coming together with Hong Kong government interpreter . cultivate to feed real - cosmos data to smart contracts , which are lines of code that perform predefined rule , San Francisco - based Chainlink is in discussions to furnish its technology to major fiscal infrastructure in Hong Kong , aver its co - founding father Sergey Nazarov .
“ hoi polloi do n’t full realize that the capital markets and crypto are very compatible . In come to Hong Kong , I found that that compatibility is conk to be accelerated here first because the government and the regulator are more open to that compatibility , ” said Nazarov , who ask for Hong Kong ’s Under Secretary for Treasury Joseph Chan to verbalise in a fireside New World chat with him at SmartCon , Chainlink ’s yearly league , in Barcelona last year .
This year , Chainlink is claim SmartCon to Hong Kong at the invitation of the local government , making Hong Kong the first Asian city to host the conference , fit in to Nazarov .
“ The Hong Kong governor is give out regulating on stablecoins and regulation on [ digital ] assets . That means Hong Kong can be a place where assets and payments can faithfully function in one system in a regulated way , ” Nazarov added . “ That ’s important , because if things are not regulated , then all of the hundred of trillion of dollar and bank will not transmigrate . ”
Steve Yun , president of Dubai - based TON Foundation , Telegram’sofficial blockchain partner , shared the ruddy sentiment , read that Hong Kong might have the biggest competitive advantage over other aspiring crypto hubs as the city “ is attempt to come up with a very comprehensive model to make builder and entrepreneur feel more comfortable and to attract endowment . ”
Hong Kong ’s financial regulations are intricate , but Charles d’Haussy , chief executive officer of Switzerland - baseddYdXFoundation , is no alien to them , having previously headed fintech for InvestHK , the Hong Kong government activity ’s alien direct investment department .
“ The Hong Kong government was very open to crypto in the early day , ” d’Haussy recall . Then occur a stop of hostility asregulators tried to combat rearing crypto sham . But “ about a twelvemonth ago or so , I think they understand that there was a new market there , and there should be regulation to make trusted that this opportunity was not missed . ”
Access to China
When Hong Kong opened up to cryptocurrencies last year , conjecture was predominant that mainland China might follow suit . That hope remains distant as China go on to block its people from trading crypto . Nonetheless , companies are now recognizing Hong Kong ’s potential as a gateway to another valuable resource from its neighbour .
While Hong Kong is a attractive feature for fiscal endowment , its neighbour to the south , Shenzhen , is home to some of the world ’s largest tech party , such as Huawei , DJI and Tencent . Unsurprisingly , crypto firms are capitalise on the combining of Hong Kong ’s well-disposed regulations and its proximity to developer resources in Shenzhen and other Chinese cities .
One such player wiretap Hong Kong ’s geographic localization is TON Foundation . As part of its exploit tobecome a tops app , Telegram is partnering with TON , which enables developer to establish blockchain - base lite apps that run on the messenger . During the web3 week , the Foundation held a bootcamp in Hong Kong in the hope of attract Chinese developer , particularly those who are familiar withWeChat ’s mini - app empire .
“ Now we are reaching out to region where they have a high identification number of developers and entrepreneurs , especially the ones who grow up using some type of mini apps through a super app , and those who enter in the increment of such ecosystem , ” said Yun .
a16z - backedAptos , for example , hosteda three - daylight hackathon in Shenzhen back in February , attracting hundred of applicant . Aptos , extend by a team that previously worked on Meta ’s Diem blockchain , has alsopartnered with Alibaba ’s cloud computing armto tempt Chinese developers .
Some extraneous founding father have taken a stride further by give a forcible comportment in the city . zkMe , establish by a German enterpriser to enable individual credential verifications , chose to locate its main office in Hong Kong .
“ We came here to establish a sustainable business and take advantage of the technical school expertness here , and then obviously , the cooperation with the Greater Bay Area is also really beneficial , ” said zkMe ’s founder and CEO , Alex Scheer , referring to the initiative that aim to mix Hong Kong with nine adjacent Chinese metropolis through policy like tax benefits for Hong Kong firms to set up in Shenzhen . Of zkMe ’s team of 16 members , 14 are free-base out of its Shenzhen office .
Some founders are more optimistic about Hong Kong paving the course for China to embrace crypto in the future tense . Anurag Arjun , founder of Dubai - based Avail , a modular blockchain companionship , consider governments that see the full benefits of crypto technologies will finally adopt a more accommodating position .
“ [ The crypto industry has ] been build very advanced engineering over the last few years . Some examples are thing like zero - cognition proof applied science , ” he say , suggesting that the underlie technology behind cryptocurrency was developed not to back fraudulent NFTs or inquisitive trading , but to enhance the foundational tech of the industry .
“ Due to the strategic nature of Hong Kong , we feel that it is an important berth — a gateway to China in the time to come , ” tell Arjun . “ If China opens up in the futurity — and once we speak to more authorities officials and make our type for the technology not only for the currentness element of it — what we do in Hong Kong will be a utilitarian lesson to also expand to China . ”
