The development of cryptocurrencies and blockchain technologies has evoked mixed reactions as fintech niche consider them apex of financial development. However, most states see them as threats. In the last quarter of 2017, China banned ICOs (initial coin offerings) and further threatened to disband the exchanges that would support them.
The implications of the Chinese ban on cryptocurrencies have reached far and wide because China is one of the most important cryptocurrency markets in the globe. Investors who had invested in crypto tokens might have to cast their eyes elsewhere for crypto-related trading. The speculation has been that Hong Kong will form the primary target.
The ICO market is worth more than $400 million
Before China banned ICOs, they were a great business. Approximately seven months into 2017, more than 65 projects had been completed in China alone. These projects amassed close to USD 400 million (South China Morning Post). According to China’s Central Bank, over 90% of the ICOs were fraudulent.
Both individuals and organizations in China and beyond had greatly invested in cryptocurrencies and the move by the Chinese government sent their prices crumbling.
Could the development be a great thing for Hong Kong?
Most speculators argued that the main issues facing cryptocurrency investors in China could turn out to be a great thing for Hong Kong because most projects are likely to shift to Hong Kong.
Aurélien Menant, the CEO of Gatecoin exchange in Hong Kong, reported they have been experiencing a surge in requests from cryptographic solution project founders based in the Mainland China seeking to list the tokens at Gatecoin. A large number of Chinese based clients are also flocking most Hong Kong exchanges to register for trading accounts.
The Chinese administration has taken the ban to the next level and now wants to limit international exchanges from accessing the local markets. Exchanges located outside China looking forward to accessing the Chinese markets will now have to take their operations closer to places they target clients can access and trade easily. The next best option is Hong Kong.
What will finally happen to the Mainland-based Chinese cryptocurrencies and ICOs over the long term is not easy to tell. Some cryptocurrency experts argue that Chinese administration is not interested in banning ICOs and cryptocurrency trading in the long term. Rather, it is only working on reigning on them as a legal framework is worked out.
One thing that is coming out from the crypto niche is that the blockchain technology wheel is rolling and is likely to continue with or without the ban. Investors are also likely to find out new ways of participating in the industry such as moving to jurisdictions that do not limit cryptocurrency trading.