March 26, 2025
By Our Correspondent
Hong Kong’s role as a financial testing ground for China is once again in focus as discussions around crypto and Web3 gain momentum. According to HashKey Capital CEO Chao Deng, the mainland is showing signs of reconsidering its strict stance on digital assets, despite the long-standing ban on cryptocurrencies.
Deng, in a recent interview with CNBC, highlighted how Hong Kong operates under the “one country, two systems” framework, allowing it to experiment with financial innovations before potential adoption in mainland China. He noted that ongoing regulatory discussions suggest China is closely watching developments in the crypto sector.
China was once a dominant force in the global crypto market, with yuan-based transactions accounting for 80% of Bitcoin’s volume before regulatory crackdowns in 2013 and 2017. Over the years, Beijing’s stance hardened, leading to bans on cryptocurrency exchanges, initial coin offerings (ICOs), and related financial activities.
However, following Donald Trump’s return to the U.S. presidency in 2024, Chinese regulators appear to be reevaluating their approach. Deng believes the new U.S. administration’s clearer stance on digital assets has influenced China’s outlook. “Now institutions, financial firms, and high-net-worth individuals feel more comfortable entering the Web3 and crypto space in a regulated way,” he explained.
Despite the central bank’s refusal to recognise cryptocurrencies as legal tender, there is no formal legislation outright banning their use. Historically, Bitcoin has been classified as a “virtual commodity,” allowing citizens to trade at their own risk.
Yifan He, CEO of Red Date Technology, also sees a change in regulatory sentiment. Previously convinced that China had no chance of lifting restrictions, he now believes there’s “more than a 50% chance” within three years. Conversations with financial regulators suggest growing interest in studying Bitcoin and digital assets more closely.
Meanwhile, Hong Kong’s crypto-friendly approach could influence the mainland’s policies. Deng emphasised that if digital asset regulations prove successful in Hong Kong, it could prompt China to reconsider its position.
In a related development, HashKey Capital recently secured a Type 1 license from Hong Kong’s Securities and Futures Commission (SFC), allowing it to offer crypto-backed brokerage services. This addition strengthens its existing licenses for asset management and investment advisory services, further solidifying Hong Kong’s role as a key player in Asia’s evolving crypto landscape.
