Reading the Crypto Tea Leaves on Hong Kong and the BRICS Alliance
INTRO
A number of crypto companies are applying for their crypto trading license in Hong Kong. TCNH, a stablecoin pegged to the offshore Chinese Yuan (CNH), was recently listed on Huobi’s exchange. China as well as Hong Kong’s digital asset ambitions might be revealing themselves.
Along with the crypto movement in China, there’s also all that’s been going on with the rest of the BRICS Alliance.
Brazil has had significant plans for crypto use nationally, and they’ve been clarifying regulations to prepare the way. Russia seems to have a love-hate relationship with crypto. Early in 2023, they announced plans to use crypto for international trade, but more recently, they’ve made some public statements that are either smoke signals or mixed signals. India is home to arguably the most partnership-focused blockchain on Earth — Polygon (MATIC). South Africa recently hosted the BRICS Alliance for what turned out to be a defining summit. According to Politico, at that gathering, it became official that six more countries will be added to the Alliance — Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. Their membership will take effect January 1, 2024.
All of the BRICS Alliance countries together will be disengaging from the US dollar for international monetary settlement.
Earlier this month, it was reported that more than 40 countries had shown interest in joining BRICS, including 22 countries which had formally requested to join.
No question, this signals a move to challenge the US dollar’s dominance. But, could all of this signal a new direction for crypto in China and a fully integrated future for crypto among all of the BRICS Alliance?
The answer is not one that can be arrived at with certainty, but as some say, we might be able to read the tea leaves, especially if we focus on what’s happening in Hong Kong.
Hong Kong has clearly been sipping on cryptocurrency tea. With a little crypto-driven tasseography, interpreting the patterns formed by tea leaves at the bottom of a cup, we might be able to perform a bit of blockchain-based fortune-telling. But what are the DeFi symbols and meanings we should be looking for? And what will they tell us about Hong Kong’s past, present, and future?
PRECEDENT
The tea leaves reveal a precedent from the past.
In 1997, Hong Kong put its futuristic, innovative strengths on full display with the introduction of a contactless smart card called the “Octopus Card.” Long before COVID and the pandemic need for such technology, it was initially used for fare payment on the city’s public transportation system. It quickly became popular and was expanded for use in other areas, such as retail payments, vending machines, and more. Today, the Octopus Card, now including updated utility and mobile-app management, is still widely used throughout Hong Kong and is considered an essential tool for daily life in the city.
The Octopus card works by storing value in the card, which can then be deducted each time the card is used to pay for something. Users can add value to their card at any of the many Octopus service points throughout the city, including convenience stores, vending machines, and kiosks. What if cryptocurrency could become one of the value-adds and utilities of the Octopus Card? It absolutely was a foreshadowing of the coming use cases involving digital assets in Hong Kong.
Imagine the day when city dwellers will be able to leverage their crypto Visa card for contactless mobile payment all across Hong Kong. Thanks to Huobi, that day could be soon.
PATTERN
The tea leaves also reveal a pattern in the present.
Since late October 2022, Hong Kong has made a string of pro-crypto moves, announcing:
- the Policy Statement on Development of Virtual Assets in Hong Kong
- the consultation conclusion to the discussion paper on crypto-assets and stablecoins
- a policy that requires crypto exchanges to obtain licensure (which was revealed in more detail in May 2023)
- a ruling that crypto is property
- a plan to allow retail investors to trade cryptocurrencies
- and most recently announced that local banks are required to open accounts for crypto firms.
In addition to these policy endeavors, Hong Kong leadership has increased optimism in the Web3 base with an allocated $50 million toward developing the city’s Web3 ecosystem. The pattern indicates Hong Kong’s desire to be a global hub for virtual assets, even with quiet support from Beijing.
Justin Sun, founder of TRON and Global Advisory Board member with Huobi, has long envisioned Hong Kong’s essential role in a decentralized future. HGBL Hong Kong Limited, an independent entity of Huobi’s unique for the Hong Kong Markets, is preparing to submit its Virtual Asset Service Provider (VASP) application to the Securities Futures Commission (SFC) of Hong Kong. Once licensed, the exchange will be fully compliant with local regulations and offer a range of trading pairs and services to customers. The new exchange will also focus on serving institutional investors and high net worth individuals in Hong Kong, positioning the exchange as a trusted and secure platform for larger investors in Asia who are looking to enter the crypto market.
TRON also aims to become a key player in the DeFi ecosystem of China and Hong Kong. Pivoting to re-focus on crypto developments in Greater China is a helpful move towards solidifying trust between the blockchain builders in this Region and international investors. TRON presently has several partnerships with major Chinese companies, which have helped to increase awareness and adoption of TRX in that part of the world. TRON and Huobi are also operating in strategic cooperation and collaboration with one another.
PROMISE
So, what are the tea leaves telling us about Hong Kong’s future?
The collaboration between Huobi and TRON has led to a number of significant developments, none potentially more revealing about the future of crypto in Hong Kong and its surrounding region than the creation and launch of TCNH. The TRON-based stablecoin pegged to the offshore Yuan (CNH) is now listed on the Huobi exchange. The TRC20-TCNH pair can now be deposited, and TCNH-USDT trading has opened. TCNH will benefit from TRON’s low transaction costs and lightning transfer speed, enabling everyday utility that’s scalable far beyond the boundaries of Hong Kong.
Crypto pegged to local Chinese currency allows for limitless possibilities and empowering accessibility in Hong Kong, but possibly more impactfully in all of China and its allies in BRICS.
One of TCNH’s aims is to support the widespread use of the Chinese Yuan as an international settlement currency. The Chinese Yuan comprises two components which are separated by law: onshore Renminbi (CNY) and offshore Yuan (CNH). For those who may not know, Renminbi (RMB) is the official name of China’s currency, while the Yuan (CNY) is China’s principal accounting unit. TCNH provides a stable bridge between China’s fiat currency as well as its new Digital Currency Electronic Payment (DC/EP) currency. DC/EP has been under development for more than five years now, and it is backed by CNY deposits held by China’s central bank. TRON’s and Huobi’s presence together enables unlimited engagement for China’s fiat and digital currencies in a decentralized global economy. Currently, according to Investopedia, RMB accounts for only 4% of international settlement transactions. TCNH provides a pathway for this percentage of market share to significantly increase.
Another aim for TCNH is to empower economic accessibility for the bankless populations of Asia. According to World Bank data, China has one of the largest population percentages in the world without bank account ownership. While DC/EP will assist with this inaccessibility to a certain extent, TCNH via the Huobi exchange offers the opportunity to fully engage with the decentralized global economy, empowering commerce and community for the entire Chinese population.
Don’t miss what this also could potentially mean for every member of the BRICS Alliance.
EMPOWER
So, what does all of this suggest?
First, Hong Kong’s digital asset ambitions are actualizing.
Second, China is taking center stage, not only in the future of global finance, but also in the future of decentralized finance and blockchain technology.
Next, China and the BRICS Alliance actually have a plan for crypto. According to Blockworks, Beijing officials are keeping close tabs on Hong Kong’s digital asset ambitions, attending crypto meet-ups and exchanging WeChat info, which implies they are doing more than staying informed. And with the final implementation of the ISO 20022 Adoption Programme, which will require every country in the world to use encrypted digital currency for international trade (that’s crypto in case you don’t know), of which the BRICS Alliance countries are early adopters, cryptocurrency adoption is inevitable.
Finally, the tea leaves are clear on one fortune. The developments in Hong Kong provide a new opportunity for the world to be fully aware of the excellent innovation and investment-worthy entrepreneurialism that has been and is happening in Asia. Blockchain advancements in Hong Kong are a strong indicator that Asia and more specifically China will likely be central in the next phase on the crypto bell curve.
In other words, the tea leaves forecast a bright decentralized financial future for the BRICS Alliance and all of its members.
