Speed, Not Status, Will Make Hong Kong a Crypto Powerhouse

Hong Kong must broaden its range of permissible cryptocurrencies if it is to establish itself as a major global hub for virtual assets, according to Changpeng Zhao, founder and largest shareholder of Binance. In a recent interview with the South China Morning Post, Zhao emphasized that the city has the potential to rival financial powerhouses such as the United States and the United Arab Emirates (UAE), but its regulatory pace must accelerate. Zhao noted that Hong Kong currently allows trading of only four cryptocurrencies—Bitcoin, Ethereum, Avalanche, and Chainlink—on licensed exchanges, a number he described as “not enough” for a competitive market [1]. He suggested that Hong Kong adopt a model similar to Japan’s, where exchanges have greater autonomy to list additional tokens [3].

Zhao, who is widely recognized as one of the most influential figures in the cryptocurrency industry, highlighted the importance of regulatory agility in attracting and retaining crypto businesses. He pointed out that the U.S. and UAE have not performed any “magical” feats that are beyond Hong Kong’s capabilities, implying that the city could replicate their success if it removed bureaucratic delays. “We shouldn’t evaluate a place’s future potential based on its current status,” Zhao said, stressing the importance of measuring progress by the speed of change [1]. He also praised Hong Kong for its proactive engagement with the Web3 industry, particularly its willingness to listen to market feedback and evolve regulations accordingly [3].

At present, the Hong Kong Securities and Futures Commission (SFC) has approved 11 virtual asset trading platforms, but Binance has not yet applied for a license. Zhao, who stepped down as Binance CEO in 2023, now operates in an advisory role and continues to advocate for regulatory frameworks that support innovation without exposing the market to undue risk. Hong Kong’s existing restrictions on tradable assets, Zhao argued, are limiting the city’s ability to attract both investors and entrepreneurs. He noted that many licensed exchanges in Hong Kong are operating at a loss, a situation that is unsustainable in the long term [3].

In addition to expanding the range of crypto assets available for trading, Zhao emphasized the need for regulatory clarity on broader aspects of the virtual asset ecosystem, including stablecoins and real-world asset (RWA) tokenization. He acknowledged that the tokenization of traditional assets, such as real estate, presents significant challenges, including liquidity bottlenecks and regulatory complexity. However, he pointed to stablecoins as a successful model of asset tokenization, noting their role in expanding the global influence of fiat currencies like the U.S. dollar. Zhao also discussed the potential of decentralized exchanges (DEXs), predicting that they will eventually surpass centralized exchanges in scale and market share due to their transparency and lower long-term costs [2].

The Hong Kong government is reportedly preparing a more detailed digital asset policy framework by the end of the year, building on its initial virtual asset policy from 2022. This comes as global regulators adopt divergent approaches to crypto, with some jurisdictions, such as the UAE and Singapore, gaining prominence for their favorable regulatory environments [3]. Zhao’s comments underscore the need for Hong Kong to act decisively if it is to remain competitive in the rapidly evolving crypto landscape. The city’s regulatory environment, while cautious, has shown signs of improvement, including the recent launch of virtual asset spot ETFs and the expansion of staking-related investment products [4].

Zhao’s insights reflect a broader industry consensus that regulatory agility and market flexibility are essential for fostering innovation in the crypto space. As countries and regions compete for a share of the growing digital asset economy, jurisdictions that can strike the right balance between oversight and innovation are likely to emerge as the dominant players.

Source:

[1] Binance founder CZ: Hong Kong can rival US as crypto hub, its future hinges on speed (https://www.scmp.com/tech/blockchain/article/3323465/binance-founder-cz-hong-kong-can-rival-us-crypto-hub-its-future-hinges-speed)

[2] Zhao Changpeng Hong Kong Full Text (https://www.chaincatcher.com/en/article/2201718)

[3] Hong Kong Needs Broader Crypto Offerings To Rival US, ... (https://cryptonews.com/news/hong-kong-needs-broader-crypto-offerings-rival-us-uae-changpeng-zhao/)

[4] IPO and Securities Trading Growth Powers Hong Kong Ahead as Global Financial Hub – SFC Quarterly Report (https://hubbis.com/news/ipo-and-securities-trading-growth-powers-hong-kong-ahead-as-global-financial-hub-sfc-quarterly-report)