HK Crypto Powerhouse 2.0 – do we believe the hype?

👇 1) Since June 1 2023, HK licensed Virtual Asset Service Providers (VASPs) could serve retail investors. Are we already seeing sentiment picking up?

👇 2) There was a time when HK-based crypto exchanges dominated. Their financial regulators and government officials have recently appeared to readjust the level playing field to accommodate crypto service companies. But do we see a noticeable pickup beyond the verbal hype?

👇 3) The HKMA, the de facto central bank, is pressuring local banks to engage with crypto companies and open bank accounts. Until now, those local banks have resisted and there is also a clear distinction between providing banking services for the crypto firms’ operations (to pay rent, salaries, etc.) AND engaging in customer payment forms (on-off-ramp from fiat into crypto and vice versa).

👇 4) Anecdotal evidence indicates that sentiment is strong, firms are hiring and local authorities – from government officials to the HKMA and the SFC are sending the message. HK Fintech week 30 Oct to 5 Nov 2023 might be the biggest crypto event in the world for 2023.

👇 5) Mainland China investors have three ways to invest their money: a) start a company, b) property or c) stock market. Judging by the performance of those three, there appear to be more profitable ways to make money in the future. Nor is the CNY competitive when Japan devalues its currency with both hands.

👇 6) Mainland investors could fear a CNY devaluation and continuous underperformance of their domestic assets vs. global assets. China is fighting deflation and urgently needs inflation – which can be achieved through devaluing the currency. This could motivate money moving from Mainland into Crypto.

👇 7) There is a simple way to move money from China into Hong Kong and crypto. This is the “flow” that everybody in crypto wishes for and to see that sentiment is more than just anecdotal evidence, we have set up an index and will monitor the data points closely. Our index could capture IF HK sentiment is transferred into actual data we can work with.

👇 8) On May 21 2021, proposals were floated that crypto exchanges in HK had to be licensed and would only be allowed to provide services to professional investors ($1m liquid capital). Shortly after, FTX packed their bags, left, and set up shop in the Bahamas.

👇 9) This is when our ‘HK Crypto Sentiment Index’ reached the 100-percentile level (range from 0 to 100). Lately, this index trades at 0 (yes zero) – a sign that we can not confirm (with data) that crypto sentiment is materially picking up in the city. Anecdotal evidence and joyous “noise,” yes but talk is cheap.

👇 10) We won’t dismiss that HK intends to rebuild crypto. Still, we have no evidence that the rocket is reaching the moon or leaving orbit. We will keep monitoring the data and publish this ‘HK Crypto Sentiment Index’ every week (even potentially refining it).

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