Hong Kong, known as a global financial centre, wants to integrate cryptocurrencies in its financial system to strengthen its worldwide position of the financial hub.

In the light of restrictive measures related to the COVID-19 pandemic and a harsh policy against their opponents, the status of Hong Kong as a key financial centre was under a certain pressure. The city authorities, however, know that in order to maintain and enhance the centre’s prestige, it is necessary to accept new players in the market.

To respond to those challenges in August of this year Hong Kong authorities granted licences to two cryptocurrency exchanges  – HashKey Exchange and OSL – to conduct retail trade in digital assets. The decision came soon after the Securities and Futures Commission in Hong Kong (SFC) began to examine applications for retail investment licences.

Julia Leung, CEO of the Commission, stressed that although Hong-Kong does not intend to become a hub for crypto trading, trading in cryptocurre_ncies is an important part of the virtual assets ecosystem.  Having a proper regulatory framework for cryptocurrencies was highlighted as a key element for building trust in the sector.

It is difficult, however, to overlook a certain inconsistency in terms of politics. China still maintains its ban on cryptocurrencies, which brings up the question of why Beijing has allowed Hong Kong to take that step. According to Neil Tan, President of the FinTech Association of Hong Kong, the decision emphasises the city’s autonomy in creating its own financial regulations. That plays to the benefit of Beijing, giving it control over the growing cryptocurrencies market. That strategy, as Tan suggests, may help Hong Kong attract foreign investment and promote the global character of renminbi.

However, as stressed by Tan, the true motives behind that decision may be complex and determined by numerous – economic, social, political and strategic – factors.

In the context of dynamic evolution of the global financial arena, Hong Kong is determined to retain the lead, adapting to new technologies and market trends.