Hong Kong positioned as crypto adoption leader, fuelled by influx of talent and regulatory support


11th November 2023 – (Hong Kong) Hong Kong is poised to embrace the next wave of cryptocurrency adoption, benefiting from an influx of crypto expertise and favourable regulatory developments, according to Jupiter Zheng, a partner at Hashkey Capital.

Zheng, who serves as a partner of liquid funds and research at the investment arm of Hong Kong-based crypto firm HashKey Group, highlighted the combination of innovative Web3 projects and positive regulatory changes as catalysts for significant growth in the region over the next four to five years.

Zheng emphasized the presence of various new projects and their respective teams in Hong Kong, which contribute to the real GDP of the region while driving activities in banking and capital markets. Despite the current state of crypto prices, Zheng acknowledged the remarkable technological advancements witnessed during the bear market, making Hong Kong well-prepared for the impending mass adoption of cryptocurrencies.

One of the key reasons behind Zheng’s optimism for Hong Kong’s crypto industry is the belief that the local economy is in need of a new driver, which he sees in the crypto sector. With the recent issuance of a specific license allowing Hashkey to offer crypto assets to retail investors, Zheng expects the demand for crypto products from Hong Kong residents to increase as the government establishes a regulatory framework that addresses investor concerns.

The updated policies and regulatory initiatives provide retail investors with enhanced safety measures such as insurance and legal protections, reducing the need for self-custody through online wallets. By simply opening an account on a licensed exchange, individuals can easily purchase cryptocurrencies using Hong Kong dollars.

While currently experiencing a bear market, Zheng anticipates a shift in sentiment when the bull market returns. He believes that retail investors will be drawn back to the market, particularly due to the security and opportunities presented by licensed exchanges.

Looking forward, Zheng predicts that the development of Web3 in Asia, including Hong Kong, will follow a similar trajectory to the GameFi sector in Southeast Asia in 2021. While acknowledging the speculative nature of projects like Axie Infinity, Zheng suggests that protocols and infrastructure projects developed in the United States and Europe could find a receptive market in Asia.

Despite the recent JPEX crypto exchange scandal that shook Hong Kong’s financial landscape, the region remains committed to its vision of becoming a leading crypto hub in Asia. Hong Kong’s government has pledged to tighten crypto regulations and has taken proactive measures, including the establishment of a task force with the police to address illicit activities related to crypto exchanges.