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Right now there’s no question that Hong Kong is friendlier to crypto companies and web3 development than New York, or the Biden Administration in general.
But how long can Hong Kong maintain a one country, two systems approach when it comes to crypto?
At a Singapore web3 “Transitions” conference this past week, Ethereum co-founder Vitalek Buterin, not known for casually stirring political pots, cautioned attendees concerning Hong Kong’s future:
“If any crypto project wants to make Hong Kong their home, they would want to have some confidence — not just that it’s friendly now but that it will continue to be friendly years from now when all kinds of unknown, regulatory and political and other kinds of events are going to happen.
“Obviously, it’s very friendly now. But the big question that I’m asking and that I think anyone is asking is: how stable is the level of friendliness? That’s where I feel the challenge lies.”
Many in the crypto space pay close attention to Buterin’s views. With Bitcoin’s c. 2009 inventor being the unknown entity “Satoshi Nakamoto,” Buterin is basically the “father of alt-coins,” via his work with Ethereum.
Will Buterin’s words sway where web3 developers and cutting edge crypto projects decide to migrate or set up shop?
Singapore and southeast asia in general have taken advantage of China’s crypto crackdown, which escalated in 2021, just one year after China implemented new draconian levels of social and political control in Hong Kong.
How has Hong Kong managed to emerge as a crypto-friendly haven, given that mainland animus?
Some believe it’s a case of China not wanting to put all its financial tech and eggs into one—or one “digital yuan”—basket.
Via Hong Kong, it can maintain distance from crypto for itself and much of its population, while hedging its bets, at a time when it is still unclear how radically crypto and blockchain technology will revolutionize the web, or anything else.
As for Hong Kong’s local political leaders, city Legislative Council member Johnny Ng responded quickly to Buterin’s comments.
“Under ‘one country, two systems’, Hong Kong has legislative power,” said Ng. “Every policy or legislation in Hong Kong goes through a period of discussion, including government policy writing, public consultation, discussions in multiple committees of the Legislative Council and the General Assembly, etc.”
Ng stressed that Hong Kong represented a stable environment for crypto development, with transparent regulations, and that it would remain so into the future.
He also invited Buterin to visit Hong Kong to see for himself in person what the city was doing to attract and facilitate crypto development.
TRENDPOST: As Blockchain Battles has long pointed out and predicted regarding crypto technology:
- there’s a there, there
- Crypto innovation and development will flow to (and reward) the paths of least resistance
It may seem somewhat unusual that two seemingly different systems, China and the United States, have both adopted harsher crypto stances since 2021.
But the two powers have increasingly mirrored each other in other ways. From “social credit systems” to military and political interventionism, the superpowers are vying for advantage.
In the U.S. the vestiges of a state and Federal system has meant that some states, at least, remain more open and friendly to crypto development and citizen use. Texas, Florida and Wyoming are all examples of that.
Think of Hong Kong as China’s “Texas.”
Of course, the closer analogy in financial terms is New York. And therein lies an interesting difference. China may gain advantage due to the financial savvy of Hong Kong, when it comes to capturing the initiative as crypto emerges from one of its longest historical droughts.
But Hong Kong doesn’t just have to compete with the U.S.. Southeast Asia, Africa and Central and South America—those non super-power, but nonetheless highly consequential blocs—have all had their reasons to see advantages in pursuing crypto tech and use.
Argentina is only the latest example, with citizens flocking to bitcoin as a relative store-of value haven from astronomical monetary devaluation.
Has world conflict, and superpower attempts to preserve existing entrenched powers and processes, slowed the progress of the crypto revolution? Absolutely.
But do timeless truths that innovation requires incentive, and that innovation which empowers, has an adoption advantage, remain true? Yes.
Buterin may be right, concerning Hong Kong.
The safest best bets for crypto for the time being and into the medium term, may be those “non-superpower” regions. Capital from the West is certainly still free enough to flow to promising projects and emerging technologies based in these developing areas, that also happen to increasingly be cutting edge crypto hubs.