In recent discussions, Xiao Feng, the Chairman and CEO of HashKey Group, has suggested a potential easing of China’s stringent cryptocurrency regulations within the next two years. This speculation is largely driven by the anticipated pro-crypto policies from US President-elect Donald Trump. Xiao posits that a clear regulatory framework in the United States could serve as an impetus for China to revisit its current prohibition on digital currencies.
The Case for China Reconsidering Its Crypto Ban
As Xiao Feng shared in an interview with the South China Morning Post, “If the US Congress and the new president establish clear crypto policies and actively promote the industry, it would certainly be a driving force for China to accept cryptocurrencies.”
Geopolitical Influences on China’s Crypto Stance
Geopolitical dynamics could accelerate China’s acceptance of digital assets. The decision by the US and its allies to exclude Russia from the SWIFT financial messaging system in 2022 highlighted the need for alternative financial infrastructures. Such moves, linked to sanctions over the Ukraine conflict, might push China to consider cryptocurrencies more earnestly to maintain its financial sovereignty.
Accelerated Timelines for Crypto Acceptance
“Without these events, China might have needed five or six years to accept cryptocurrency businesses. Now, due to these factors, that timeframe could be shortened to two years,” Xiao explained. Over the past few years, China has enforced a rigorous ban on initial coin offerings (ICOs), crypto trading, mining, and other related activities, citing financial stability and the potential for illicit activities as primary concerns.
Hong Kong: A Bridge to Mainland China
Despite this ban, Hong Kong has been allowed to cultivate its digital asset industry, positioning itself as a potential bridge should mainland China relax its regulations. Should China decide to re-engage with the digital asset market, Xiao suggests that regulated stablecoins could be the initial focus. “Stablecoins are currently the best solution for cross-border business-to-consumer trade,” he noted.
Survey Insights from Yiwu
Supporting this perspective, HashKey conducted a survey in Yiwu, a major manufacturing and trade hub in mainland China. The survey revealed that nearly all merchants had received inquiries from international buyers about making payments using popular US dollar-based stablecoins such as USDT and USDC.
HashKey Group’s Strategic Positioning
HashKey Group operates HashKey Exchange, one of Hong Kong’s three licensed crypto exchanges. The company plans to launch its own blockchain, the HashKey Chain, next month. With over 300 employees in Hong Kong and additional teams in Singapore, Tokyo, Dubai, Bermuda, and Europe, HashKey is expanding its global footprint. While the Chinese government has not indicated any immediate plans to relax its crypto ban, Xiao emphasized the importance of maintaining a strong presence in Hong Kong.
Looking Ahead
“Only by staying in Hong Kong can we serve mainland China when that market opens up. We firmly believe that day will come,” Xiao asserted, expressing confidence in the potential for future market expansion.
At present, Bitcoin is trading at $91,083. The cryptocurrency market remains dynamic, and developments in policy and technology continue to shape its future landscape.
