The People's Bank of China highlighted the importance of cryptocurrency regulation in its 2024 Financial Stability Report. In terms of cryptocurrency regulation, mainland China and Hong Kong have different attitudes.
China maintains a strict ban on cryptocurrency trading and mining, while Hong Kong is actively building its cryptocurrency licensing system, showcasing the two places’ different approaches to this emerging field.
Highlights of the 2024 China Financial Stability Report
In its 2024 Financial Stability Report, the People's Bank of China specifically pointed out that global attention to cryptocurrency regulation is increasing. The report mentioned that 51 jurisdictions around the world have imposed bans or major restrictions on cryptocurrency-related activities, showing the international community's attention to cryptocurrency regulation. At the same time, some countries are working to improve their regulatory frameworks to meet new challenges brought by the cryptocurrency industry.
Following the People's Bank of China's announcement of a ban on digital currency trading and mining in 2021, this policy continues to be strictly enforced in mainland China. In stark contrast, Hong Kong has adopted a more relaxed policy under an independent regulatory environment, allowing licensed exchanges to provide digital currency trading services to retail investors. This measure is intended to establish Hong Kong as a regional cryptocurrency hub, attracting global companies, especially those seeking clear regulation and investor confidence.
The report further states that financial institutions in Hong Kong, including HSBC and Standard Chartered, are required to include cryptocurrency transactions in their customer regulatory frameworks to meet international standards and ensure that financial institutions can mitigate the risks associated with digital asset transactions. Through these measures, Hong Kong not only seeks a balance between innovation and strong regulation, but also sets an example for other financial centers in exploring the adoption of digital currencies.
Hong Kong continues its march toward becoming a cryptocurrency hub
Hong Kong has recently made another notable statement on its path to becoming a cryptocurrency hub. In an interview with Wen Wei Po, Hong Kong Legislative Council member, CPPCC member and well-known entrepreneur Wu Jiezhuang proposed a forward-looking proposal to include Bitcoin in Hong Kong’s official fiscal reserves.
Wu Jiezhuang believes that such a move will not only diversify Hong Kong’s financial investment portfolio, but also enable Hong Kong to become a global leader in the adoption of digital assets.
In response, the Treasury of the SAR government said that the Hong Kong Exchange Fund has implemented a global diversified investment strategy to reduce risks and ensure long-term sustainable returns.
Although digital currencies have not yet become the main investment target of the fund, the Hong Kong Treasury has also made it clear that external investment managers responsible for supervising assets have the authority to explore diversified asset allocations globally. This also implies that under the current regulations, investment in digital currencies is feasible, even if such investment remains within certain limits.
In summary, Hong Kong’s policy stance gives it more flexibility in the field of cryptocurrency, reflecting that Hong Kong is gradually advancing its goal of becoming a regional and even global cryptocurrency center with an open yet cautious attitude.