Richard Li, the son of Hong Kong tycoon Li Ka-shing, is backing a venture capital firm that has identified Hong Kong as a potential hub for cryptocurrency and blockchain innovation. This news comes at a time when increased regulatory scrutiny in the United States is causing some blockchain startups to look for opportunities overseas.
The venture capital firm, Oriente, was co-founded by Li and James Sugden, formerly the Chief Risk Officer of Standard Chartered Bank. Oriente aims to provide financial services to underserved populations in Asia through the use of blockchain technology and is currently raising funds for the expansion of its platform.
In a recent interview, Sugden said that Hong Kong’s regulatory environment is more favorable than that of other jurisdictions. “Hong Kong has a very supportive regulatory environment. They have been quite forward-thinking in terms of their approach to new technologies, particularly fintech and blockchain,” he said.
This is in contrast to the United States, where the Securities and Exchange Commission (SEC) has been taking a tough stance on initial coin offerings (ICOs), which have been used by many blockchain startups to raise funds. The SEC has recently issued subpoenas to dozens of ICO issuers and has warned that many ICOs may be considered securities and therefore subject to US securities laws.
This regulatory uncertainty, combined with the high costs of doing business in the United States, has caused some blockchain startups to look for opportunities elsewhere. Several countries, including Switzerland, Malta, and Estonia, have taken steps to attract blockchain startups by creating favorable regulatory environments and offering tax breaks.
However, Hong Kong, a Special Administrative Region of China, has its own unique advantages. It is one of the world’s major financial centers and has a highly educated workforce. It also has close ties to China, which has been a leader in blockchain innovation.
According to Oriente, Hong Kong’s proximity to China give it an advantage in the race to become a center for blockchain innovation. “We believe that Hong Kong, given its proximity to China, and the fact that the Chinese government has been very supportive of blockchain innovation, is a natural place for blockchain startups to be based,” said Sugden.
China has been at the forefront of blockchain innovation, with many of the world’s largest blockchain startups originating in the country. However, China’s regulatory environment has been less supportive of cryptocurrency, with authorities cracking down on ICOs and cryptocurrency exchanges.
Despite this, Oriente is bullish on the future of cryptocurrency in Hong Kong. “We believe that cryptocurrencies and blockchain technology are going to play an increasingly important role in the global financial system,” said Sugden. “In Hong Kong, we see a lot of potential for blockchain startups to innovate and push the boundaries of what is possible in the financial services industry.”
Oriente’s plans for Hong Kong include the launch of a blockchain-based platform that will allow lenders to extend credit to underserved populations. The platform will use machine learning algorithms to assess creditworthiness and provide loans quickly and efficiently.
The platform is expected to launch in the second half of 2018, pending regulatory approval. Oriente is currently in talks with the Hong Kong Monetary Authority about obtaining a virtual banking license, which would allow it to operate as a fintech bank.
Overall, Oriente’s bullish stance on the potential of Hong Kong as a hub for cryptocurrency and blockchain innovation is supported by the city’s favorable regulatory environment, proximity to China, and its mature financial industry. If Oriente is successful in its plans, it could pave the way for other blockchain startups to consider Hong Kong as a base for their operations.
CMCC Global, a venture capital company focused on blockchain technology, has stated that the recent digital-asset crackdown in the United States is creating opportunities for Hong Kong to become a leading cryptocurrency hub. The company’s co-founder, Charlie Morris, appeared on Bloomberg Television and stated, “the US is shooting themselves in the foot” and giving other regions, including Hong Kong, the chance to woo innovative businesses.
Hong Kong has been working to establish itself as a cryptocurrency hub since China banned all ICOs in September 2017. The city has faced challenges, including a lack of banking support for cryptocurrency companies. However, Hong Kong’s government has been seeking to address this issue, with plans to launch a regulatory sandbox and a virtual banking system.
Cryptocurrency companies have been seeking a friendly regulatory environment in which to operate in an uncertain global environment. Many governments have been hesitant to embrace cryptocurrency as a legitimate asset due to its perceived association with illicit activities.
The United States has been leading the charge in the global crackdown on digital assets. The recent ruling by the US Securities and Exchange Commission (SEC) that Ethereum and Bitcoin are not securities provided some much-needed clarity but did not address the broader regulatory concerns surrounding the industry.
Hong Kong, on the other hand, has been taking steps to embrace the cryptocurrency industry. The city’s Securities and Futures Commission (SFC) recently released guidance on how it plans to regulate cryptocurrency funds. The SFC stated that it will not be treating cryptocurrencies as securities at this time, but that might change depending on the nature of the issuer, the rights that the token holders possess, and the way in which the tokens are marketed.
CMCC Global is seeking to help cryptocurrency companies navigate this complex regulatory landscape. The company has raised $100 million to invest in blockchain and cryptocurrency startups, with a focus on Asia. CMCC Global’s investments include Circle, Bitmain, and Xapo, among others.
In conclusion, the United States’ digital asset crackdown is creating opportunities for Hong Kong to become a global cryptocurrency hub. While the industry faces regulatory challenges globally, Hong Kong has been taking steps to embrace the industry and offer a friendly regulatory environment. CMCC Global’s investment in the region highlights the potential that Hong Kong offers to the cryptocurrency industry.