In a recent commentary for CNBC, Deng emphasized Hong Kong’s strategic role as a bridge to mainland China, often serving as a testing ground for the country’s emerging financial and technological innovations.
“Hong Kong has traditionally been a laboratory for testing new economic models and industrial sectors,” Deng said. He added that talks with regulators have indicated a move to leverage the “one country, two systems” policy to expand the use of crypto and Web3 technologies.
Historically, China was the global hub for cryptocurrency trading and mining, handling around 80% of global Bitcoin transaction volume until 2013. Later, in 2017, the government tightened restrictions, banning local cryptocurrency exchanges, initial coin offerings (ICOs) and digital asset promotional events.
JUST IN: Hong Kong ETF issuer CONFIRMS China is actively preparing a shift into Bitcoin and crypto.
— Altcoin Daily (@AltcoinDailyio) March 24, 2025
The election of Donald Trump as US president in November 2024 marked a significant shift in China’s stance towards cryptocurrencies, moving from a hostile approach to a more welcoming one. “With the support of Trump and the new administration, we expect a clearer regulatory framework, allowing institutions, foundations, financial institutions and high-net-worth investors to explore the crypto and Web3 space in a regulated and safe manner,” Deng predicted.
While China’s central bank does not recognize cryptocurrencies as legal tender, the law does not explicitly prohibit their use. A 2013 directive defined Bitcoin as a “virtual commodity,” allowing citizens to trade cryptocurrencies on their own, but at risk.
“Regulation always takes longer than the market expects. This is a pattern in all emerging industries. This is already a crucial message for the industry. US regulations will certainly influence others, including Europe, Asia, as well as places like Singapore and Hong Kong,” Deng concluded.