Hong Kong is crypto’s “center of gravity” after US crackdown

According to Ambre Soubiran, CEO of Paris-based institutional crypto market data company Kaiko, the “center of gravity” of the sector might finally shift to Hong Kong because of the U.S. government’s icy stance toward cryptocurrency legislation.

The United States has been at the forefront of the cryptocurrency industry for some time; however, as the government appears to be adopting a regulation-by-enforcement strategy, there is a growing belief that a significant number of companies, developers, and investors will soon leave the country in search of more accommodating environments.

In an April 1 interview with the Wall Street Journal, Soubiran argued that the recent U.S. crypto crackdown will help Hong Kong achieve its objective of becoming a major crypto hub:

“The U.S. being more stringent these days than ever on crypto and Hong Kong regulating in a more favorable way…is going to clearly shift the center of gravity of crypto assets trading and investments more towards Hong Kong.”

She continued, “We want to be where our customers are.”

After the collapse of FTX in November, the U.S. government has been increasingly hostile towards cryptocurrencies, with Senators like Elizabeth Warren recently claiming that they are assembling an “anti-crypto army.” In contrast, Hong Kong has been moving in the other direction.

In January, the Hong Kong government unveiled its first ambitions to become a center by implementing progressive regulations to assist high-quality crypto and fintech companies in 2023.

On February 20, Hong Kong’s Securities and Futures Commission (SFC) suggested a crypto licensing scheme aimed at offering consumer safeguards without inhibiting innovation. The legislation is still being refined.

According to a March 20 speech by Hong Kong’s Secretary for Financial Services and the Treasury, Christian Hu, over eighty virtual asset-related companies have indicated an interest in establishing a presence there.

Moreover, he mentioned that 23 crypto businesses have already signaled that “they intend to create a presence.”

Adding to the good news emanating from the special administrative region of China, Bloomberg reported on March 28 that the Hong Kong Monetary Authority and SFA would convene a joint conference on April 28 to assist cryptocurrency companies in establishing domestic banking relationships.

According to reports, Chinese banks such as Shanghai Pudong Development Bank, the Bank of Communications Co., and Bank of China Ltd. have either begun selling banking services to crypto enterprises in Hong Kong or contacted crypto firms.

Soubiran also said in mid-March that Kaiko intends to shift the headquarters of its Asia-Pacific division from Singapore to Hong Kong in reaction to the latter nation’s crypto-friendly posture.

“What we’re seeing is clear support for more clarity on the regulatory system in Hong Kong,” she told Bloomberg in an interview, adding, “although we’re observing an improvement in Hong Kong’s attractiveness in the area, we’re relocating.”