Retail Crypto Shops in Hong Kong Benefit from China\u2019s Crypto Ban
Hong Kong’s vibrant retail crypto industry has benefited from China’s ban on cryptocurrency transactions and overseas exchanges. With cryptocurrency transactions deemed illegal on the mainland, Chinese visitors are flocking to Hong Kong’s lightly regulated brick-and-mortar crypto stores to trade crypto.
Retail Crypto Shops in HK Popular Destinations for Chinese Investors
According to a new report from the Financial Times, retail crypto shops in Hong Kong have become a popular destination for Chinese investors. These shops allow customers to easily purchase digital assets with cash, often without disclosing their identity or the origin of their money.
The report cited a 27-year-old man who travels from Shenzhen to Hong Kong for crypto purchases. The Chinese investor said digital currencies were helpful in “transferring money to other places,” adding he would make the 90-minute cross-border trip “whenever there’s a need.”
With cryptocurrency transactions banned on the mainland and overseas exchanges prohibited from servicing onshore clients, Hong Kong’s proximity to China makes it an attractive destination for crypto enthusiasts. These retail crypto shops, often lightly regulated, offer a loophole for customers to buy digital assets in large volumes easily, the FT said.
For instance, the OTC store Crypto HK reported that mainland Chinese customers accounted for less than 5% of its clientele before border reopenings earlier this year. Currently, the number has surged to approximately 50%.
Retail Crypto Shop Owners Expect Government Regulations
Despite the growth and success of the retail crypto industry, some shop owners are keen on more government regulations. David Huang, who works at OTC crypto platform OTCXpert, said that industry regulations would be instrumental in its development. Currently, individual shops determine their level of scrutiny and identification requirements for clients.
While stores like OTCXpert adhere to the “know your customer” process, others advertise slogans like “no KYC” to attract customers seeking quick and anonymous transactions. “The government regulators haven’t said what we have to do,” Huang said about OTC shops, adding that having a clear guide was “pretty important.”
Notably, some retail crypto shops abstain from accepting Chinese users due to concerns over Beijing’s crypto ban. Roger Li, co-founder of One Satoshi, a crypto store with nine Hong Kong branches, told the FT that he did not take mainland customers. He told the media:
“I would say around 30 per cent of new inquiries actually come from mainland China customers. What we advise them is that they will be able to trade with us soon. Probably the regulatory landscape in China is going to change.”
Hong Kong Strives to Position Itself a Crypto Hub With New Regulations
Hong Kong has tried to distinguish itself from other jurisdictions clamping down on cryptocurrencies. The city is actively working towards becoming a digital assets trading hub, despite the collapse of high-profile exchanges in other regions.
In June, Hong Kong implemented new regulations that require cryptocurrency exchanges to obtain licenses. However, most over-the-counter (OTC) stores, the backbone of the retail crypto industry, remain outside the purview of Hong Kong’s Securities and Futures Commission.
Last week, Hong Kong authorities established a task force geared towards promoting the expansion of the Web3 ecosystem. The squad will be led by Hong Kong’s financial secretary Paul Chan and other official and non-government members.
More recently, an institute backed by Hong Kong’s securities regulator announced that it aims to roll out a virtual asset training program to advance the city’s Web3 ambitions. The government also plans to train wealth managers and launch a platform to enable remote examinations.
Hong Kong’s crypto push has already started to pay off. Several prominent Web3 firms, including crypto exchanges Huobi Global and CoinEX, have recently filed applications for an operating license.
The post Retail Crypto Shops in Hong Kong Benefit from China’s Crypto Ban appeared first on Tokenist.
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