Nothing is more powerful than an idea whose time has come.
- Victor Hugo
Since the 1990s, China’s official control over its residents’ internet activity has been an ongoing game of cat-and-mouse.
However, given the massive grass roots appeal of digital currency in China, and the decentralized nature of blockchain, its government’s efforts to squash unofficial activity are best compared to an ever-expanding game of whack-a-mole, played with a foam mallet.
To add extra difficulty to the game, major mainland corporations are busily developing blockchain solutions, and bringing them to Hong Kong, China’s open underground den for economically viable pests of all kinds, increasingly those in the blockchain space.
Hong Kong’s status as refuge for blockchain boosters was on full display after the mainland blanket ICO ban of September, 2017, following which the world’s largest exchange, Binance, ̶f̶l̶e̶d̶ moved to Hong Kong first, and China’s major blockchain conference, BitKan, relocated there from Beijing.
But the trend is expanding beyond refugee status. Consider PingAn, a mainland-based insurance giant. This summer, they launched a blockchain platform for trade and supply-chain processes, countenanced by the Hong Kong ‘s Monetary Authority, with participants including HSBC and Standard Chartered.
PUBLIC/PRIVATE COOPERATION + PROGRESSIVE THINKING = FUTURE HUB
Such cooperation could well be remembered as a watershed moment in Hong Kong’s emergence as a blockchain-for-business powerhouse, wielding power as disproportionate to its small physical size as it does in international finance.
Do note the “blockchain-for-business” caveat. For those who would see distributed ledgers topple governments and financial institutions in quick succession, ushering in a decentralized utopia, the dream lives on, located chiefly in the distant future.
For those with an eye to pragmatic application of blockchain technology to unlocking business value, Hong Kong stands shoulder-to-shoulder with Singapore as centers to drive adoption, for the same tandem reasons: government cooperation, and financial hub status.
For evidence of Hong Kong’s getting that blockchain holds more promise than moon coins for magic-bean growth investors, we have the words of HK Invest’s fintech lead, Charles d’Haussy, who pointedly got the big picture by telling reporters after the China ban:
“Blockchain is a very high priority for us. There is hype, and there is the fast grab of money with ICOs in some cases. But what we are looking at building here in Hong Kong is an infrastructure for new businesses and existing businesses, to make sure the technology and innovations remain a key enabler for financial sector growth.”
Going beyond words, to action, a very promising sign of Hong Kong governmental blockchain-friendliness lies in its new “talent list” of professionals who will enjoy streamlined immigration for their ability to “enhance Hong Kong’s economic competitiveness.” Distributed ledger technologists are prominently listed.
Indeed, you can see the commitment to blockchain right on Invest Hong Kong’s homepage.
By way of contrast, America’s trade-boosting site, selectusa.gov, makes no mention of it.
Local Hong Kong businesses are increasingly going in on blockchain as well. Native diamond merchants Chow Tai Fook, in collaboration with America’s Gemological Institute, have just launched an app that offers blockchain-based diamond grading reports. Over three thousand reports have been issued thus far.
YEAH, BUT WHAT ABOUT ICOS?!?!
The current obsession over ICOs and coin prices is akin to fretting about where the charcoal is going to come from for the barbecue. True, should the barbecue become popular enough, there may be sense in buying and holding some briquettes to sell off. But let’s do remember it’s about the meat.
Perhaps their corporate owners’ fossil energy-dependency helps explain why western media attention still hyper-focuses on ICOs rather than blockchain transformation, although it’s a bit of a moot point for the foreseeable future. Projects are increasingly looking for private funding, rather than an ICO crowd sale.
In this case, Hong Kong, like Singapore, has a distinct advantage — as a home to innumerable managed funds that can serve as potential project investors. True, Switzerland, Britain and the U.S. still lead in sheer volume of international assets managed.
But after taking into account the aforementioned regulatory climate for blockchain, and the likelihood of even Vitalik getting a sit-down with a decision-maker at Credit Suisse, it’s easier to like the chances of getting a foot in the door in Hong Kong, with the world’s greatest concentration of financial institutions.
Don’t forget that Chinese assets under management reached $4.2 trillion last year, and that those investors don’t like stocks. Better to be in Hong Kong than Switzerland to feed growing mainland fund appetite for blockchain exposure.
Nonetheless, if “Cryptowars III: Return of the ICO” is a thing, the trailer is already airing in Hong Kong. The results of being marginally more open to cryptocurrency trading than extra-soft-treading Asia tigers Japan and South Korea are already being felt. Ben Yates, an RPC lawyer specializing in fintech and cyber law, reports marked growth in ICO-related business since September, coming in at a daily pace.
Then there’s the normally stiff-collared PricewaterhouseCoopers (PwC), its China office testing a blockchain tool, and aiming to capitalize on a growing interest in raising funds through initial coin offerings (ICOs) among businesses in Asia’s manufacturing, technology, and retail sectors, and their subsequent migration to Hong Kong, in light of its comparatively reasonable regulations. Moreover, the PWC Hong Kong office has confessed to receiving payments in bitcoin, while it and the PWC Singapore office have invested in Chinese blockchain project VEChain .
Hong Kong’s “release valve” function for restrictive mainland Chinese policies will drive its role as a blockchain financing and establishment center.
Hong Kong’s progressive attitude to blockchain, demonstrated in regional public/private sector cooperation, makes it a twin hub with Singapore in the emerging blockchain-for-business space.