Emily Walker
Xiao Feng, the Chairman and CEO of HashKey Group, suggested that China’s strict regulations on cryptocurrencies might ease over the next two years. This potential change could be driven by favorable crypto policies from the incoming US administration led by President-elect Donald Trump. Xiao believes that supportive regulations in the US could prompt China to reassess its current cryptocurrency restrictions.
Factors That Might Influence China’s Crypto Policy
In an interview with the South China Morning Post, Xiao remarked, “If clear cryptocurrency policies are established by the US Congress and the new president, this would propel China towards a more favorable stance on digital assets.”
He also highlighted geopolitical dynamics as vital factors that could lead to an increased acceptance of cryptocurrencies by China. The exclusion of Russia from the SWIFT financial system in 2022, due to sanctions related to the Ukraine conflict, has shown the need for alternative financial systems. This scenario may encourage China to further investigate cryptocurrency as a means to secure its financial independence.
Xiao believed that, without these geopolitical events, China might have taken five to six years to accept cryptocurrencies fully; however, with these developments, this period might be reduced to just two years.
In recent years, China has maintained a stringent ban on initial coin offerings (ICOs), crypto trading, and mining, primarily due to concerns over economic stability and the risk of illegal activities. Despite these restrictions, Hong Kong has been granted leeway to cultivate its digital asset sector, which may place it in a unique position should regulations ease in mainland China.
Should there be a shift in China’s digital asset policy, Xiao proposed that regulated stablecoins could be the first area of focus. He emphasized that “Stablecoins currently offer the best solution for cross-border consumer-to-business transactions.”
Backing this viewpoint, HashKey conducted a survey in Yiwu, a key manufacturing and trade center in China. The findings indicated that nearly all local merchants had received inquiries from international clients asking about payments using well-known US dollar-backed stablecoins like USDT and USDC.
HashKey Group operates the HashKey Exchange, one of Hong Kong’s three licensed cryptocurrency exchanges, and is set to launch its own blockchain, HashKey Chain, next month. With a workforce exceeding 300 in Hong Kong, the company is also expanding its operations globally, with teams in Singapore, Tokyo, Dubai, Bermuda, and Europe.
Although the Chinese government has not signaled any immediate intention to relax its crypto ban, Xiao pointed out the significance of maintaining a presence in Hong Kong. “Staying in Hong Kong positions us to serve mainland China effectively when the market eventually opens,” he stated confidently.
At the time of this report, Bitcoin was valued at $91,083.