Hong Kong aims to become a crypto hub: the challenges according to CZ

Hong Kong is at a crucial crossroads in its journey to establish itself as one of the world’s leading crypto hubs

According to Changpeng Zhao (known as CZ), founder of Binance, the city has all the necessary conditions to compete with established markets like the United States and the United Arab Emirates. However, success will depend on the ability of Hong Kong authorities to act quickly and flexibly, expanding the range of crypto available on regulated platforms.

A still limited market: only four cryptocurrencies available

Currently, retail traders in Hong Kong can buy and sell only four cryptocurrencies on authorized platforms: bitcoin, ether, avalanche, and chainlink. This limited selection stems from the rules imposed by the Securities

and Futures Commission (SFC), which legalized retail trading in August 2023. According to these rules, a token can be listed only if included in at least two significant investable indices, one of which must come from an independent provider linked to traditional finance.

Zhao emphasized how this choice is too limiting, stating that “four tokens are not enough” for a market that aims to become a global benchmark. He cited the Japanese model, where exchanges enjoy greater autonomy in selecting assets to list, as an example of greater openness and dynamism.

Stringent rules to minimize financial risks

The SFC has adopted a conservative approach, motivated by the desire to avoid mistakes and protect investors. While this caution ensures a high level of security, it risks hindering innovation and competitiveness in the local market. Zhao acknowledged the clarity of the government’s orientation towards adopting Web3, praising the authorities’ ability to act quickly when necessary. However, he reiterated that to reach the levels of the United States and the United Arab Emirates, it will be essential to expand the range of available digital assets.

Hong Kong prepares for new digital asset rules

In response to the needs of a rapidly evolving market, Hong Kong is set to publish a more detailed regulatory framework for digital assets by the end of the year. This new regulation will build on the first policy published in October 2022, which set general objectives to foster sector growth. The initiative comes at a time when global regulators are adopting very different approaches, making international competition increasingly fierce, as highlighted in the analysis on stablecoin regulation.

The role of CZ and the future of Binance in Hong Kong

Despite stepping down as CEO of Binance in 2023, following an agreement with the U.S. government, Changpeng Zhao continues to be a key figure in the industry. He describes himself today as a “backbench coach,” a mentor advising entrepreneurs and supporting the development of the BNB Chain, a blockchain hosting over 4,000 projects. Although he does not hold stakes in most of these, Zhao remains the primary holder of BNB tokens, controlling nearly two-thirds of the circulating supply.

Interestingly, despite Hong Kong having already granted licenses to eleven virtual asset trading platforms, Binance has not yet applied for authorization to operate in the city, as reported in the expansion of the crypto sector in Hong Kong. This highlights how, despite the potential, the local market still needs to make significant strides to attract major global players.

Hong Kong between innovation and caution: the challenge of speed

According to Zhao, the real challenge for Hong Kong is not to replicate “magic” achieved by other markets but to be sufficiently fast and flexible in adapting its rules. The city has already shown a strong willingness to embrace Web3 and position itself as a leader in the digital asset sector, as evidenced by the growth of bitcoin and ethereum trading. However, to fully realize this potential, it will be necessary to find a balance between investor protection and the promotion of innovation.

A race against time to become a global leader

Hong Kong’s race towards leadership in the cryptocurrency sector has just begun. Changpeng Zhao’s words represent a clear invitation to local authorities: to compete with giants like the United States and the United Arab Emirates, it will be crucial to expand the range of available assets and adopt a more dynamic and less conservative approach. Only in this way can the city attract the main operators in the sector and consolidate its position as a global hub for cryptocurrencies and digital assets, as also highlighted in the recent introduction of crypto trading by the largest digital bank.

Moreover, the discussion on the potential acceptance of crypto spot ETFs represents another step towards integrating the local market with global trends.