Source: Orange News
Author: Xiong Peisi, Executive Officer of Hong Kong Securities and Futures Professionals Association
According to sources, the Swiss Stock Exchange (SIX) is actively exploring the establishment of a dedicated cryptocurrency trading platform in Europe, aiming to compete with digital asset giants such as Binance, OKX, and Coinbase, seeking to secure a foothold in this rapidly growing market. Personally, I estimate that the Swiss Stock Exchange hopes to leverage its strong reputation in financial markets and local excellent digital asset laws to attract large investors interested in digital asset trading. The exchange is currently conducting in-depth research to create a platform for trading various types of digital assets in the future, including spot cryptocurrencies and derivative products. It is evident that the Swiss Stock Exchange has profound foresight and emphasis on the digital asset market, reflecting the growing global financial market's attention to cryptocurrencies.
US credit card giant Visa was the first to participate in the development of the cryptocurrency sector, collaborating with multiple trading platforms and purchasing CryptoPunk NFTs as early as August 2021. Currently, Visa has almost become the largest hub connecting retail investors from fiat to the cryptocurrency realm. Visa is even researching and developing a central bank digital wallet.
In Asia, for example, Indonesia opened the world's first state-owned cryptocurrency trading and settlement exchange in July 2023 (operated by PT Bursa Komoditi Nusantara, cleared by PT Kliring Berjangka Indonesia, and custodied by PT Tennet Depository Indonesia). At that time, Indonesia already had over 17.54 million cryptocurrency users, and the number of compliant cryptocurrency assets, excluding 10 tokens issued by local operators under local regulation, had reached 383. Hong Kong's biggest competitor in Asia, Singapore, has always been an open economy, consistently friendly to Web3 and providing relatively stable and sustainable development policies. The Monetary Authority of Singapore (MAS) does everything possible, taking on the role of regulation and balanced development, appropriately allowing certain fintech companies and projects to operate without immediate full regulation, and providing SGD 150 million in funding. This is also an important reason why talent and capital in Hong Kong's cryptocurrency sector have shifted to Singapore in the past two years.
In fact, the cryptocurrency industry in Hong Kong sensed the future's potential after 2010, actively participating and attempting to promote its development. Local well-known exchanges that started operations as early as 2017, such as Coinsuper and Tidebit, and even HKVAX, which has long been striving for a compliant exchange license in Hong Kong, have faced numerous challenges and finally achieved this goal after several years. Practitioners and institutions in Hong Kong's cryptocurrency sector have always been committed to making cryptocurrency a part of Hong Kong's financial industry, but there is always a gap between ideals and reality. Historically, the biggest obstacle to cryptocurrency development in Hong Kong has not been fintech, blockchain knowledge and talent, or capital, but rather the lack of truly clear and reasonable regulation, ecological balance methods, and official support.
At the intersection of ethics, compliance, and legality, it presents a complex dilemma, leading to Hong Kong's inconsistent stance on cryptocurrency development. In 2022, several international super exchanges such as Celsius, BlockFi, and FTX successively collapsed; in May 2022, the stablecoin Terra Luna, which once drove the world crazy, collapsed entirely within 24 hours; in 2023, Silvergate Bank, which was once the largest bank supporting cryptocurrency globally, filed for bankruptcy in Texas, USA... From late 2023 to early 2024, the local JPEX financial scam case in Hong Kong involved over HKD 1.6 billion. The licensed Japanese cryptocurrency exchange DMM Bitcoin suffered a hacker attack in May this year, resulting in the theft of 4,502.9 Bitcoins, and in December finally announced the termination of operations after abandoning restructuring. Between 2010 and 2016, cryptocurrency did indeed trigger numerous events affecting people's livelihoods in Mainland China, leading to a comprehensive ban on cryptocurrency trading announced by the central government in September 2017, requiring all exchanges to completely withdraw from the Mainland market by September 30 of the same year. It is estimated that all of this has made Hong Kong's regulatory environment towards cryptocurrency not something to be taken lightly, leading to a cautious and unstable attitude. The stance of each country and region towards cryptocurrency is absolutely understandable. Thus, this cake has become a dilemma.
As of November 25, 2024, the international cryptocurrency market value exceeds USD 3.5 trillion, with fluctuations exceeding 133.49% in the past year, and Bitcoin's market value alone has reached USD 1.9 trillion, dominating at 55.42%; meanwhile, the market value of stablecoins is USD 19.43 billion, accounting for 5.56% of the total cryptocurrency market value. In today's economic downturn, I believe no one would want to give up this expanding cake, which is why even candidates for the 2025 US presidential election are rallying votes by supporting the development of cryptocurrency. After winning the election, the Trump administration directly nominated Paul Atkins, who has a friendly attitude towards cryptocurrency, to replace Gary Gensler, who has a tough stance on cryptocurrency, as the chairman of the Securities and Exchange Commission (SEC), effective January 20, 2025.
In November 2024, in a lawsuit regarding cryptocurrency at the Shanghai Higher People's Court, the judge stated that virtual assets in Mainland China do not have the same legal status as legal tender, but as a type of virtual commodity, they still possess property value, and individuals holding virtual assets themselves do not violate the law.
From a purely technological perspective, the development of cryptocurrency technology not only applies blockchain and ledger technology in fintech and regulatory technology but can also transfer its practices from the field of cryptocurrency to real-life applications. For example, real estate transaction contracts, artworks can apply NFTs, and fund bond distributions can utilize tokenization.
In summary, as an international financial center, and in order to maintain its status, I see no reason for the government to hesitate in the pace of developing digital financial cryptocurrency. Hong Kong should genuinely open up and actively seize market share in cryptocurrencies instead of continuing to be indecisive or even reducing resources allocated to the financial sector. When technology, talent, and capital shift to other countries or cities, attracting them back to Hong Kong is not an easy task.