In January, the Beijing government put information from more than 80 government departments on Chang’an Chain to “effectively improve the security and order of government affairs and social data”.
The launch of the new centre is the latest development in the Chinese government’s plans to boost the industrial use of blockchain, which it has sought to separate from digital assets, its most popular use case.
Blockchain development became a focus for the government after President Xi Jinping endorsed the technology in 2019. In 2021, the Chinese State Council issued a five-year plan that identified blockchain as one of seven major areas of development for China’s digital economy.
Visitors attend the Hong Kong Web3 Festival at HKCEC in Wan Chai on April 14, 2023. Photo: Yik Yeung-man
Hong Kong, meanwhile, has taken a different tack to Web3 development.
The city, governed separately under the “one country, two systems” arrangement, has recently sought to become a virtual asset hub with regulations making crypto a new asset class. Earlier this year it allocated HK$50 million (US$6.4 million) to boost the development of the Web3 industry, and it is setting up a virtual asset task force led by the city’s finance chief.
Under a new mandatory licensing scheme for crypto exchanges that takes effect June 1, retail investors will be allowed to trade cryptocurrencies with large market capitalisations such as bitcoin and ether.
The moves have generated excitement that Hong Kong could become a base for Chinese activity in the crypto industry. Exchanges with ties to mainland China like OKX and Huobi have announced plans to get licensed in the city.
Some Hong Kong branches of mainland banks have also been onboarding crypto clients. Late last month, the Hong Kong Monetary Authority put out a circular telling local banks to support regulated virtual asset businesses with a “legitimate need for bank accounts”.
A liaison office official even supported Hong Kong’s recent moves at the city’s Digital Economy Summit in April.
However, experts note that Beijing’s official stance on crypto has not changed, despite the developments in Hong Kong and the promotion of blockchain.
“I suggest people not to read much into the Hong Kong policy as it relates to the mainland,” said Zhou Chenggang, CEO and founder of CPIC Investment Management Hong Kong, a subsidiary of the government-backed mainland property insurer China Pacific Insurance (CPI). “So far, the policies remain separate, and there have been no signals of that changing.”
CPIC, which Zhou said operates independently of its parent, opened two blockchain and Web3-related funds targeting institutional and wealthy investors in April. However, those funds are not available to mainland investors and are not an indication that Chinese regulation is changing, he added.
