Hong Kong could be a ‘tailwind’ for lagging crypto activity in Asia: Chainalysis
Recent crypto advancements in Hong Kong could provide a “potential tailwind” to lift crypto activity in the East Asian region, which has mainly suffered from a China-wide ban on trading activities since 2019.
Cryptocurrency value received in East Asia amounted to just 8.8% of the world between July 2022 and June 2023, according to an Oct. 2 report from Chainalysis, making it the fifth most active crypto market. However, Chainalysis said Hong Kong’s recent moves could help increase this number.
“A potential tailwind for East Asia comes from Hong Kong, where several crypto initiatives and industry-friendly regulations launched over the past year have fostered bubbling optimism.”
Data from Chainalysis reveals that East Asia’s share of crypto transaction value went from around 30% in 2019 to less than 10% by the second quarter of 2022, after a number of crypto-related bans in China.
However, Chainalysis said there is “bubbling optimism” in Hong Kong, noting that despite its much smaller population, Hong Kong is already an “extremely active crypto market” by raw transaction volume.
Between July 2022 and June 2023, the market received an estimated $64 billion in crypto, compared to $86.4 billion in China, despite having a population of just 0.5% the size of the mainland.
In comments to Chainalysis, Merton Lam of CryptoHK, an over-the-counter digital asset trading center in Hong Kong, said that cryptocurrencies are becoming a staple in the investment portfolios of many banks, private equity firms and high-net-worth individuals that they work with within the region.
In addition, Chinese state-owned businesses have also launched cryptocurrency-focused investment funds of late.
That being said, Dave Chapman of digital asset platform OSL Digital Securities told Chainalysis that while digital assets “are not going away” in East Asia — it’s still too early to say whether Hong Kong’s crypto ambitions mean China has fully embraced the cryptocurrency space.
“The promotion of Hong Kong as a potential crypto hub is not necessarily indicative of the Chinese government’s stance on crypto […] This could be viewed as an exploratory approach to understanding digital assets without loosening mainland policies.”
Related: Hong Kong retains top crypto-ready position for two consecutive years
Speaking to Cointelegraph, Matrixport’s Head of Research and Strategy Markus Thielen said Hong Kong will serve as a “testing ground” for broader cryptocurrency adoption in China.
However, Hong Kong is making a big play in one particular area which other states haven’t managed to capitalize on, says Thielen:
“Crucially, there is a genuine interest to attract the crypto asset management industry which has so far been a missing piece of the puzzle as most crypto firms tend to be labeled as service providers, instead of being the end-user of crypto.”
Magazine: Are DAOs overhyped and unworkable? Lessons from the front lines
The Bank of France’s governor called for crypto oversight to be given to the European Securities and Markets Authority, and for tightening MiCA’s rules on stablecoin issuance.
Takaichi’s election may have a “material impact” on the governance and regulatory perception of crypto assets in Japan, experts told Cointelegraph.
Politics
Badenoch pulls off first conference speech as leader, but it is less clear if this will be her last
There’s no question that Kemi Badenoch’s on the ropes after a low-energy first year as leader that has seen the Conservative Party slide backwards by pretty much every metric.
But on Wednesday, the embattled leader came out swinging with a show-stopping pledge to scrap stamp duty, which left the hall delirious. “I thought you’d like that one,” she said with a laugh as party members cheered her on.
A genuine surprise announcement – many in the shadow cabinet weren’t even told – it gave the Conservatives and their leader a much-needed lift after what many have dubbed the lost year.
Politics latest: Stamp duty to be axed under Tories
Ms Badenoch with her husband, Hamish. Pic: PA
Ms Badenoch tried to answer that criticism this week with a policy blitz, headlined by her promise on stamp duty.
This is a leader giving her party some red meat to try to help her party at least get a hearing from the public, with pledges on welfare, immigration, tax cuts and policing.
In all of it, a tacit admission from Ms Badenoch and her team that as politics speeds up, they have not kept pace, letting Reform UK and Nigel Farage run ahead of them and grab the microphone by getting ahead of the Conservatives on scrapping net zero targets or leaving the ECHR in order to deport illegal migrants more easily.
Ms Badenoch is now trying to answer those criticisms and act.
At the heart of her offer is £47bn of spending cuts in order to pay down the nation’s debt pile and fund tax cuts such as stamp duty.
All of it is designed to try to restore the party’s reputation for economic competence, against a Labour Party of tax rises and a growing debt burden and a Reform party peddling “fantasy economics”.
She needs to do something, and fast. A YouGov poll released on the eve of her speech put the Conservatives joint third in the polls with the Lib Dems on 17%.
That’s 10 percentage points lower than when Ms Badenoch took power just under a year ago. The crisis, mutter her colleagues, is existential. One shadow cabinet minister lamented to me this week that they thought it was “50-50” as to whether the party can survive.
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(L-R) Shadow business secretary Andrew Griffith, shadow environment secretary Victoria Atkins and shadow housing secretary Sir James Cleverly. Pic: PA
Ms Badenoch had to do two things in her speech on Wednesday: the first was to try to reassert her authority over her party. The second was to get a bit of attention from the public with a set of policies that might encourage disaffected Tories to look at her party again.
On the first point, even her critics would have to agree that she had a successful conference and has given herself a bit of space from the constant chatter about her leadership with a headline-grabbing policy that could give her party some much-needed momentum.
On the second, the promise of spending control coupled with a retail offer of tax cuts does carve out a space against the Labour government and Reform.
But the memory of Liz Truss’s disastrous mini-Budget, the chaos of Boris Johnson’s premiership, and the failure of Sunak to cut NHS waiting lists or tackle immigration still weigh on the Conservative brand.
Ms Badenoch might have revived the room with her speech, but whether that translates into a wider revival around the country is very hard to read.
Ms Badenoch leaves Manchester knowing she pulled off her first conference speech as party leader: what she will be less sure about is whether it will be her last.
I thought she tacitly admitted that to me when she pointedly avoided answering the question of whether she would resign if the party goes backwards further in the English council, Scottish parliament and Welsh Senedd elections next year.
“Let’s see what the election result is about,” was her reply.
That is what many in her party are saying too, because if Ms Badenoch cannot show progress after 18 months in office, she might see her party turn to someone else.
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