Two cities are clearly missing from the list of global “crypto hubs” published by CoinDesk. Tokyo and Hong Kong. Tokyo and Hong Kong are broadly and publicly positive about cryptocurrencies at a time when other countries and regions, especially the United States, are sending unfriendly messages.
So why isn’t it on the list? One possible reason is that while neither Tokyo nor Hong Kong are new to cryptocurrencies, they have stayed out of the spotlight for some time. But now Tokyo (or Japan) and Hong Kong are poised to become more and more important players in the crypto world.
Tokyo (or Japan)
Consider Japan first. Japan is actively working to position itself as one of the Web 3 powers. Clearly, Japan is no newcomer. But after the hack of cryptocurrency exchange Coincheck in early 2018, Japan fell into a kind of hibernation. Authorities tightened regulations, and the mood in the crypto community was not particularly bright.
But now Japan is clearly making a comeback. The regulator has learned lessons from the Coincheck hack and the Mt. Gox hack that preceded it, and has taken safeguards to protect users. So when the FTX debacle rocked much of the crypto world, FTX Japan users were relatively protected. Some Tokyo politicians are actively working to create clear rules for crypto assets.
Hong Kong is also nothing new as a Web3 hub, and its appeal may have waned in recent years due to lockdowns due to the spread of the new coronavirus and news of tightening regulations on the crypto asset industry in mainland China.
But now, Hong Kong is making explicit efforts to position itself as a global crypto hub. In June, it reportedly started accepting applications for cryptocurrency exchange licenses and put pressure on banks to accept cryptocurrency exchanges as customers.
The United States sees it as a risk, but Hong Kong sees it as an opportunity. Hong Kong legislators called on Coinbase to apply in Hong Kong, amid a dispute with the US Securities and Exchange Commission (SEC). Hong Kong’s position stands out, given the history of tightening regulations on crypto assets in mainland China. Mainland China appears to at least acquiesce to Hong Kong’s welcoming attitude. At least for now.
Of course there are strict regulations.
I am not saying that running a cryptocurrency exchange in Tokyo or Hong Kong is easy. Operating in these jurisdictions has strict rules and restrictions, which may be difficult for some global companies. For example, Kraken and Coinbase withdrew from the Japanese market.
Still, Tokyo and Hong Kong have clearly demonstrated their openness to the cryptocurrency business. It is likely to attract cryptocurrency companies around the world.
｜Translation: CoinDesk JAPAN
｜Editing: Takayuki Masuda
｜Original: Don’t Overlook Tokyo and Hong Kong as Crypto Hot Spots