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Despite Hong Kong making steady progress in adopting cryptocurrencies, mainland China has not changed its anti-cryptocurrency stance in terms of local legislation.
Some Chinese state-owned banks are increasingly opening bank accounts to serve cryptocurrency customers in Hong Kong. CPIC Investment Management, a Chinese government-backed firm regulated as a Hong Kong entity, even launched two cryptocurrency funds in April.
All of these developments do not mean that China has or will soften its approach to regulating Bitcoin (BTC) anytime soon, according to CPIC Investment Management CEO Chenggang Zhou.
“The Hong Kong government is trying very hard to promote Web3 and cryptocurrencies, but this does not imply any changes in the regulations in the mainland or the attitude of the Chinese government towards cryptocurrencies,” Zhou said in an interview with Cointelegraph on May 5.
Zhou stressed that despite the support of the Chinese government, CPIC Investment Management operates as a Hong Kong-based entity regulated by the Securities and Futures Commission.
“Hong Kong regulations allow us to invest in various markets, asset classes or products such as cryptocurrencies, so we are not violating any rules or laws,” the CEO said. He added:
“We got into cryptocurrency because Hong Kong rules allow us to do it. But this is in no way indicative of the attitude or policy of the Chinese government or a change in policy.”
Zhou noted that China maintained its anti-crypto stance for a long time, even before the complete ban on cryptocurrencies in September 2021. He said he does not expect the local government to change its cryptocurrency policy in the foreseeable future.
The CEO is not alone in that China remains and will continue to be anti-crypto, trying to increase deposits in Chinese banks with crypto accounts.
“Given the Chinese government’s crackdown on the financial sector, it’s hard to imagine China loosening control over the ability of Chinese citizens to use cryptocurrency,” Lesperance & Associates founder David Lesperance told Cointelegraph.
See also: Hong Kong court recognizes cryptocurrencies as property
According to Lesperance, China wants to increase its foreign currency deposits, whether it be fiat to buy cryptocurrency or the cryptocurrency itself. “They are bifurcating markets to keep out domestic Chinese customers but attract foreign customers,” he said.
The lawyer also noted that the cryptocurrency market in mainland China is “still effectively closed.” This raises law enforcement concerns that Chinese customers will be able to use Hong Kong exchanges to withdraw money from China. “Of course, the authorities will try to stop this leak,” said Lesperance.
Zhou of CPIC also mentioned that crypto exchanges in Hong Kong have a strict “Know Your Customer” policy that aims to restrict mainland Chinese investors from accessing their platforms.
“I do not expect any licensed cryptocurrency exchanges in Hong Kong to accept mainlanders to trade on the exchanges,” Zhou said.