Crypto-analyst Arthur Hayes says Hong Kong has a vital part to play in the development of the global Bitcoin and other virtual currencies market. The next cryptocurrency bull run, according to the former CEO of BitMEX, a market leader in cryptocurrency futures, will begin when China enters the market again.
The Hong Kong government’s announcement about introducing a bill to regulate crypto is a sign that China is trying to ease its way back into the market. This could be because Hong Kong acts as “the proxy through which China interacts with the world,” according to former Bitcoin co-creator Sean Hayes.
He commented, “When China loves crypto, the bull market will come back and It will be a slow process, but the red shoots are budding.”
As per Hayes, Hong Kong might serve as Beijing’s test market for its experiments with cryptocurrency markets and as a conduit for Chinese capital entering the international cryptocurrency markets:
Further, he stated, “If these flows actually materialize in the way I imagine, they will be a strong supporting pillar of the next bull market.”
In a survey by Forex Suggest released in July 2022, Hong Kong has named the nation best poised for the broad adoption of cryptocurrencies. Numerous aspects were taken into account, including startup culture, crypto ATM installations, and crypto-friendly regulations.
Unfortunately, it is said that by the end of September this year, Hong Kong has lost this position partly because of its murky cryptocurrency regulations. Due to this, a number of significant crypto-focused companies and events were obliged to relocate their operations to Singapore and other nations and territories that were viewed as more welcoming.
Despite having one of the largest economies on earth, China has generally been hostile to the cryptocurrency sector. The nation’s initial ban, which forbade banks from processing Bitcoin transaction, was enacted back in 2013.
When Beijing conducted numerous regulatory operations to banish Bitcoin mining from the nation and declared all cryptocurrency transactions to be banned in 2021, it stepped up its crackdown on the industry.
But as per Hayes, “China has not left crypto — it has just been dormant.”
In September 2022, China did start up its Bitcoin mining once more, and Chainalysis stated in its 2022 Global Crypto Adoption Index that China had re-entered the top ten this year after coming in 13th place in the previous year.
Given the Chinese government’s assault on cryptocurrencies, the Global Crypto Adoption Index’s authors said they considered the development “particularly noteworthy,” but their data shows that “the prohibition has either been unsuccessful or lightly implemented.”
How China is essential for Hong Kong’s cryptocurrency growth?
Arthur Hayes, co-founder of BitMex, commented on news of Hong Kong’s “comeback” efforts on his blog, saying that access to Chinese consumers is essential for Hong Kong’s appeal to cryptocurrency businesses.
As cryptocurrency investors, we are concerned about Hong Kong’s capacity to meet China’s capital needs, he stated. The regular wealthy Chinese people are what drive the Hong Kong economy, whether it is through retail sales or capital flows.
He also voiced concerns about how China could use its influence over Hong Kong to undermine any pro-crypto measures such as, “What’s to say Beijing won’t reconsider tomorrow and roll back all these advantageous crypto policies?”
But he went on to say that he thought this time, “China is for real.”
By the end of the month, the nation is anticipated to make its position on digital assets known. As previously reported, the Hong Kong Special Administrative Region of China will make a policy announcement at the next Hong Kong Fintech Week event, which is set to take place between October 31 and November 1.