China’s stance on crypto remains unshaken – Cryptopolitan

Despite advancements in cryptocurrency adoption in Hong Kong, mainland China maintains its stringent anti-crypto stance regarding local regulations.

Recent developments in Hong Kong, including state-affiliated banks opening accounts for crypto clients and the launch of two cryptocurrency funds by CPIC Investment Management, a China government-backed firm, do not signal a change in mainland China’s approach to cryptocurrency regulation.

Crypto developments in Hong Kong

Chenggang Zhou, CEO of CPIC Investment Management, emphasized that his firm operates as a Hong Kong entity regulated by the Securities and Futures Commission.

“Hong Kong regulations allow us to invest in different markets or asset classes or products like cryptocurrencies, so we’re not breaching any regulations or laws,” he said.

Zhou further clarified that CPIC’s involvement in cryptocurrency is not indicative of the Chinese government’s attitude, policy, or change of policy towards the digital asset class.

China has long maintained an anti-crypto stance, even before the complete ban on cryptocurrencies in September 2021. Zhou does not expect the local government to change its crypto policies in the foreseeable future.

This view is shared by David Lesperance, founder of Lesperance & Associates, who noted that China is unlikely to loosen its control over the ability of Chinese nationals to use crypto.

Instead, China wants to increase its foreign currency deposits, whether that is fiat used to purchase crypto or crypto itself, he added.

Hong Kong exchanges and mainland China

Zhou also highlighted that cryptocurrency exchanges in Hong Kong have strict Know Your Customer (KYC) policies, aiming to restrict mainland Chinese investors on their platforms.

“I don’t expect any licensed crypto exchanges in Hong Kong to accept onshore mainland citizens to trade in the exchanges,” he stated.

On April 18, a Hong Kong court acknowledged cryptocurrencies as property that can be held in trust, in a ruling involving the defunct crypto exchange Gatecoin.

Judge Linda Chan reportedly said that crypto has property attributes and deemed it appropriate to follow reasoning applied by other jurisdictions that crypto is property and can form the subject matter of trust.

This new ruling potentially provides insolvency practitioners in Hong Kong with greater clarity regarding digital assets and aligns the territory with other jurisdictions.

Despite these developments in Hong Kong, the crypto market in mainland China remains “effectively shut down,” according to Lesperance.

This raises concerns about enforcement and the possibility of Chinese clients using Hong Kong exchanges to move money out of China. “Certainly, the authorities will try to stop this leakage,” Lesperance noted.

While Hong Kong continues to advance its cryptocurrency adoption, mainland China remains steadfast in its anti-crypto stance.

The Chinese government’s backing of a Hong Kong-regulated firm involved in cryptocurrencies should not be interpreted as a change in policy or attitude towards the digital asset class.

**The contents of this article were gotten from Zhou’s interview with media outlet Cointelegraph.