November 14, 2024
The commitment of US President-elect Donald Trump to endorse the cryptocurrency sector may serve as a catalyst for mainland China to rejuvenate its digital asset market, as suggested by an industry expert amidst the intensifying technological rivalry between the two nations. Xiao Feng, chairman and CEO of HashKey Group, stated in an interview with the South China Morning Post last week that if the US Congress and the incoming administration establish clear cryptocurrency policies and consistently legislate to promote the industry, it would undoubtedly encourage China to embrace cryptocurrencies.
Furthermore, the actions taken by Washington and its Western allies in 2022 to exclude Russia from the Swift financial messaging system—part of a broader sanctions strategy aimed at compelling Moscow to cease its invasion of Ukraine—might also persuade Beijing to support the cryptocurrency sector, according to Xiao. He noted that without these developments, China might have required five to six years to accept cryptocurrency businesses.
However, due to the current circumstances, this timeline could potentially be reduced to two years. In recent years, Beijing has enforced a stringent prohibition on initial coin offerings, cryptocurrency trading, mining, and other related activities, viewing this sector as a potential threat to financial stability and a conduit for illicit activities.
Xiao’s remarks highlight the renewed optimism within the cryptocurrency industry following Trump’s electoral victory, during which he pledged to position the US as a leader in the digital asset space, including the establishment of a “strategic national bitcoin stockpile” and the removal of regulators perceived as hostile to cryptocurrency.
Bitcoin experienced a remarkable surge on Monday, surpassing US$81,000 and reaching a new all-time high, reflecting an increase of nearly 85 percent since the beginning of the year. Despite this significant rise, the Chinese government has not indicated any plans to ease its restrictions on digital assets.
However, Beijing has permitted Hong Kong to advance its digital asset sector. Should China decide to revive its digital asset market, it could initiate this process with a payment-clearing system utilizing regulated stablecoins, as suggested by Xiao. Stablecoins are cryptocurrencies pegged to the value of certain fiat currencies, such as the US dollar or the euro.
Xiao emphasized that stablecoins represent the most effective solution for cross-border business-to-consumer transactions, highlighting their rapid transaction speeds and low fees as key advantages.
His team at HashKey recently conducted a survey in Yiwu, a major manufacturing and trade center in mainland China, revealing that nearly all merchants had received inquiries from buyers interested in making payments with popular US-dollar-pegged stablecoins like USDT and USDC. The company, which operates in areas such as venture capital, tokenization, and blockchain infrastructure solutions, anticipates launching its own blockchain, the HashKey Chain, in the upcoming month, according to Xiao.
Xiao said HashKey is committed to Hong Kong, even as many crypto firms relocate to other jurisdictions including Dubai and Singapore. “Only by staying in Hong Kong can we serve mainland China when that market opens up,” he said. “We firmly believe that day will come.”