Source: South China Morning Post; Compiled by: Wuzhu, Golden Finance
US President-elect Donald Trump's pledge to support the cryptocurrency industry could provide new impetus for mainland China to revive its digital asset market as technological competition between the two countries continues to escalate, a senior industry insider said.
"If the US Congress and the (incoming) president clarify cryptocurrency policies, continue to legislate and promote the development of the industry, this will definitely be a driving force for China to accept (cryptocurrency)," Xiao Feng, chairman and CEO of HashKey Group, said in a statement.
Xiao Feng said that the move by Washington and its Western allies in 2022 to cut off Russia's connection with the Swift financial information system as part of a package of sanctions aimed at forcing Moscow to abandon its invasion of Ukraine could also help convince Beijing to support the cryptocurrency industry.
“From now on, it may take five or six years for China to accept [cryptocurrency business],” he said. “But now, due to these factors, this time frame may be shortened to two years.”
Xiao Feng, chairman and CEO of HashKey Group.
Xiao Feng’s comments reflect the renewed enthusiasm in the cryptocurrency industry after the election of Trump, who vowed during his campaign to put the United States at the center of the digital asset industry, including creating a “national strategic bitcoin reserve” and removing regulatory agencies considered anti-crypto.
Bitcoin surged to a record high above $81,000 on Monday, up nearly 85% since the start of the year.
Despite this, the Chinese government has so far given no indication that it might relax its ban on digital assets. Beijing, however, has let Hong Kong continue to develop its digital asset industry.
If China is to revive the development of its digital asset market, Xiao Feng said the country could start with a payment clearing system based on regulated stablecoins. A stablecoin is a fixed-price cryptocurrency whose market value is pegged to some fiat currency, such as the dollar or euro.
“Stablecoins are currently the best solution for cross-border business-to-consumer trade,” he said, citing short transaction times and low fees among other reasons.
HashKey’s team recently conducted a survey in Yiwu, a mainland manufacturing and trade hub, and found that almost all merchants had received inquiries from buyers asking if they could pay with popular dollar stablecoins, such as USDT and USDC, Xiao Feng said.
Xiao Feng’s insights are based on his experience in banking and finance before he got involved in digital assets: he held senior positions at the Shenzhen branch of the People’s Bank of China and the Shenzhen regulatory bureau of the China Securities Regulatory Commission. In 1998, he founded Boshi Asset Management, one of China’s largest fund companies, and had experience in the traditional securities industry.
He joined Wanxiang Group in 2011 and then founded the group’s digital asset division HashKey in Hong Kong in 2018. HashKey operates HashKey Exchange, one of the three licensed cryptocurrency exchanges in the city, as well as other cryptocurrency and blockchain businesses.
Xiao Feng said the company’s business covers venture capital, tokenization and blockchain infrastructure solutions, and it is expected to launch its own blockchain HashKey Chain next month.
HashKey has been expanding its business in Asia and other markets around the world. The company currently has about 300 employees at its headquarters in Hong Kong, 50 employees in Singapore and 11 employees in Tokyo. Xiao Feng said the company also has teams in Dubai, Bermuda and Europe.
Xiao Feng said HashKey remains committed to Hong Kong even as many cryptocurrency companies relocate to other jurisdictions such as Dubai and Singapore. "Only by staying in Hong Kong can we provide services to mainland China when it opens up," he said. "We firmly believe that day will come."
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