Hong Kong is set to open its doors to digital assets and investors, with ambitious plans to become an Asian crypto hub.
In a move expected to increase the flow of capital from China into digital assets, Hong Kong will legalize the purchase, sale, and trading of cryptocurrencies for all of its citizens in June. The move will also include mainland Chinese institutions.
The announcement has been met with a positive reaction from the crypto market, which surged by 9% on the day amidst a war on crypto being waged by U.S. regulators.
The bullish sentiment related to Hong Kong is based on publicly available information from December, which highlighted the government’s legislative framework that seeks to allow certain crypto service providers under the same regulatory umbrella as banks.
The financial secretary for Hong Kong, Paul Chan, has expressed his belief that in 2023, local regulators and the government will be willing to work with fintech and cryptocurrency startups.
Speaking at an event hosted by the government-run incubator Cyberport, Chan asserted that Hong Kong had become a hub for the world’s leading virtual asset companies.
Crypto service entities expanding in Hong Kong
Over the last few months, Hong Kong has been seriously discussing crypto regulation strategies, with several cryptocurrency service companies attempting to establish a presence in the city.
U.S.-based Interactive Brokers has moved to team up with crypto exchange OSL Digital Securities in a joint Hong Kong crypto push. Meanwhile, Singapore’s largest bank, DBS, plans to apply for a digital asset license to provide crypto trading services to its customers in Hong Kong.
Crypto market surge and bitcoin FOMO
TRON founder Justin Sun has repeatedly stated that capital from China and other Asian countries will drive the next bull market.
As a result, some traders have begun to move assets from North America to Eastern Asia, with regional bitcoin flows reaching $7.7 million over a seven-day average, according to Chanalysis data.
Per CoinMarketCap data, the industry’s total market cap surged by 6.8% on Wednesday alone, from around $1.07 billion to $1.15 billion.
Bitcoin prices have risen as a result of this rare bout of FOMO, with the asset rising 8.8% on the day to $24,533. However, BTC has a long way to go before reaching previous highs, as it is currently 64.4% below its November 2021 peak of $69,000.
As Hong Kong prepares to become an Asian crypto hub, investors and the crypto market will closely monitor its progress, hoping to increase investment and growth in the digital asset sector.