Stuck in the Past: China’s Anti-Crypto Regulations
Despite a budding romance between Hong Kong and cryptocurrencies, mainland China remains a committed skeptic. Under the strict watch of the state, the mainland has shown no signs of softening its hardline stance on crypto regulations. They’re like the grandparent at a wedding who refuses to dance—no matter how bad the DJ is.
Hong Kong’s Crypto Love Affair
Over in Hong Kong, a different story unfolds. Local banks, keen on innovation, are getting friendlier with crypto clients. For example, CPIC Investment Management, a government-backed firm, launched two cryptocurrency funds in April. Exciting times, right? Well, maybe not so fast. CEO Chenggang Zhou warns that these advances in Hong Kong don’t change the game for the mainland. He maintains the regulatory stance of the Chinese government remains as firm as ever.
“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,” — Chenggang Zhou, CPIC Investment Management CEO.
Why the Regulatory Wall Remains High
China’s love for strict regulations dates back to before the complete ban in September 2021. Zhou confidently predicts that there won’t be any changes in the near future. It’s like a stubborn child refusing to eat their vegetables; no amount of sweet-talk is going to change that. David Lesperance from Lesperance & Associates echoes Zhou’s sentiments, suggesting that as long as China is tightening its financial control, the ability for Chinese folks to dabble in crypto will remain as distant as a summer vacation in Antarctica.
The Bifurcated Market Strategy
It seems that while crypto users in Hong Kong are getting the royal treatment, the mainlanders are left waving through the window. Lesperance pointed out that the Chinese government is keen to attract foreign currency deposits but wants to keep domestic users at bay—like a bouncer at a trendy nightclub. The crypto scene in mainland China is essentially on lockdown. Enforcement challenges loom large, with authorities cautious about possible financial ‘leakage’ from China via Hong Kong exchanges.
Strict KYC Policies in Hong Kong
Any hopes that crypto exchanges in Hong Kong would roll out the welcome mat to mainland Chinese investors are dashed by stringent Know Your Customer (KYC) policies. Zhou asserts, “I don’t expect any licensed crypto exchanges in Hong Kong to accept onshore mainland citizens to trade in the exchanges.” It’s a tantalizing tease, but no damage done. For now, the mainland’s restrictions are tighter than a drum.
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