Global Crypto Press was the first crypto news outlet to cover this story back in February when all we had was a single inside source. Three months later, our source's information seems to have been 100% accurate, as the 'rumors' from then are now part of official statements made by the government of Hong Kong.
For those just joining the story here, the important thing to know is that in 2021 China implemented a crypto trading and mining ban and ejected any company that existed for those purposes. China went from the country with the most mining power, to completely off of the top 10 list, with small countries like Malaysia and Iran now outperforming them.
You may wonder - why is that surprising? If they banned trading and mining, isn't it predictable that a sudden drop in mining hashpower coming out of China would follow?
It's a fair question, and most people did predict the effect of a Chinese ban on crypto... at least once among the 6 times they 'banned' crypto before this, just to have its popularity continue to grow.
But the 2021 ban was unlike any of their previous attempts, it was backed with enforcement as businesses that continued to leave their bitcoin miners running found themselves being raided, and their hardware seized. Now, with the choice to risk being next or relocate, companies either moved to other countries or simply sold their mining hardware to a company that was.
This is how the situation remained, until now.
Now, crypto appears to be on the verge of returning to China via Hong Kong...
Hong Kong is a unique situation, once fully independent of China, they are now officially 'part of China' - but unlike any other area of the country they maintain the ability to pass their own laws and remain economically independent from the federal government.
It's with these additional freedoms that Hong Kong has just announced they will begin issuing permits to crypto based businesses beginning June 1st.
3 Things We Will Likely See Happen Almost Immediately...
- First, an increase in the overall demand for cryptocurrencies. China has one of the largest economies in the world, and if a significant portion of its population begins investing in or using cryptocurrencies, it could drive up the price of these digital assets. This could potentially lead to a new bull market in cryptocurrencies, benefiting investors and businesses in the sector.
This is why Binance CEO CZ tweeted that historically news like this is followed by a bull run.
- Secondly, increased innovation in the crypto space. China is known for its technological prowess, and if Chinese companies are allowed to operate in the crypto space, it could lead to new technological advancements and applications for blockchain technology.
Unfortunately, Chinese technological advances are often the result of stolen data as the nation infamously targets tech companies around the globe with the intent of recreating propritaty tech.
- Third likely impact we'll see is this decision influencing other countries' policies towards crypto. If China, once a staunch opponent of cryptocurrencies, reverses this to allow them it could encourage other countries that have been hesitant about cryptocurrencies to reconsider as well.
I can't think of any examples of countries willingly staying out of a market both the US and China are in.
One Concern Remains..
While Hong Kong still maintains some independence from the rest of the Chinese Government, Laws they pass in Hong Kong can be vetoed by the ruling party.
We brought this up when speaking to our source there nearly 3 months ago, that portion of the article reads:
...we're hearing that Hong Kong leaders are NOT being met with disapproval from China's leadership in Beijing "there's nothing to indicate mainland officials don't want this to happen, and I believe we're well beyond the point where they would make their stance known" our source explained.
Beijing quietly allowing this to happen may be thanks to some of China's wealthiest business leaders, who have been complaining to officials about being restricted from a market with huge growth potential..."
At the time we published that article Hong Kong was still several steps away from this becoming a reality, now they're on the final step having announced their intention to issue permits for crypto companies to operate there starting June 1st.
It's a situation where approval from the ruling Communist Party will come in the form of silence. Hong Kong is providing a way for the ruling party to reverse their 2021 crypto ban without the President or other high ranking party leaders having to acknowledge it.
Considering we're just 3 days away from Hong Kong officially open to issue permits for crypto companies to provide their services to citizens, we believe if Beijing disapproved they would have made that clear by now.
In our opinion, this is actually going to happen.
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Author: Adam Lee
Asia News Desk
Breaking Crypto News