China is reiterating its stance on cryptocurrencies by targeting operations of state firms in Hong Kong.
Real Economy Priority
The Chinese government has issued new directives for branches of major institutions, including internet giants and state financial firms operating in Hong Kong. These state entities are now restricted from participating in stablecoin or cryptocurrency-related businesses. The government urges them to focus on initiatives supporting the 'real economy', which encompasses traditional industries such as manufacturing and infrastructure.
Impact on Hong Kong's Crypto Ambitions
Hong Kong aims to establish itself as a global crypto hub by implementing regulatory frameworks to attract exchanges and startups. However, the new restrictions on Chinese state firms could create a disconnect between Hong Kong's ambitions and Beijing's policy direction. While private companies may still engage in crypto activities, the absence of large state-backed entities may slow institutional adoption in the region.
Statements and Analysis
According to *Caixin*, the Chinese government will restrict branches of internet giants and state financial institutions in Hong Kong from engaging in crypto businesses and is requiring them to prioritize the development of the real economy. This move reflects China's cautious approach towards digital assets.
This directive signals that despite Hong Kong's efforts to enhance its crypto infrastructure, the central government maintains strict controls over financial risks, potentially impacting future investments in the sector.
