Given the ongoing Coronavirus taking place around the world, having a large impact on the crypto activities such as conferences and communities, we continue to believe Southeast Asia (SEA) may be potentially spared as one of the breakout regions in the eastern hemisphere in 2020. As we emphasized earlier this year, we advise our readers to pay attention more to SEA this year.
Nevertheless, blockchain developments in China, Korea and Japan continue to develop. We share below a quick but comprehensive update on the crypto and blockchain trends in China and Hong Kong from 2019 up until now. Checkout all the existing updates of the other Asian countries here.
A brief background on the crypto and blockchain happenings in the country:
At a Politburo Committee session in late October 2019, China’s President Xi Jinping officially reverted many confusion and pre-existing negative stance on cryptocurrencies in China, officially endorsing blockchain and calling for the country to accelerate its adoption of blockchain technologies as a core for innovation.
China historically frowned at crypto trading and mining but its attitude seems to be reverting this year. Already by 2019, China Electronic Information Industry Development (CCID) announced that there are over 700 blockchain enterprises in China, with over 500 relevant investments reported.
China is rapidly adopting a pro-blockchain stance and will introduce so-called crypto law in January next year. It also plans to launch a digital currency successfully earlier than all the countries. Additionally, the mining industry in China continues to thrive, Chinese cryptocurrency mining giant Canaan Creative and Bitmain have both filed to become publicly-traded companies in the United States.
Unlike China, Hong Kong regulators have historically taken a relatively laid back approach to cryptocurrency companies. To date, the United Kingdom, the United States, Hong Kong, and Singapore have the largest number of registered digital currency exchanges.
However, it’s also time for crypto exchanges that benefited from Hong Kong’s lax financial regulations to become more disciplined and alert. The Securities & Futures Commission of Hong Kong (SFC) published new rules on Nov 6th this year that will govern exchanges via licenses and mandatory enrollment in a regulatory framework.
Crypto and Blockchain Trends in the Country:
- Central Bank Digital Currency- Multinational telecommunications and consumer electronics giant Huawei has signed a strategic cooperation agreement with China’s central bank, the People’s Bank of China (PBoC) to help with its central bank digital currency.
- Certification on digital payments technology- China’s central bank, the People’s Bank of China (PBoC), will use a new system to certify 11 types of fintech hardware and software products relating to digital payments.
- Cross border financing on blockchain– China is looking into the application of blockchain and Artificial Intelligence (AI) to cross-border financing.
- Trading on blockchain- The China Construction Bank (CCB) officially released the second version of its blockchain trading platform, which reached 360 billion yuan ($50 billion) in cumulative transaction volume. Additionally, the blockchain trade finance solution of the People’s Bank of China (PBoC) processed over 30 billion yen ($4.36 billion) in foreign exchange transactions.
- Decentralized finance on blockchain– China Merchants Bank International (CMBI) is partnering with Nervos Network — a Chinese blockchain startup founded by a former researcher and developer of the Ethereum Foundation.
- Invoices on blockchain– Shenzhen, a major Chinese city, has issued nearly six million blockchain-based invoices in a year since their inception in August 2018.
- Letter of credit on blockchain- Banking and financial services giant HSBC has completed the first yuan-denominated letter of credit transaction on a blockchain using the Voltron trade finance platform.
- STO in Hong Kong–
- Regulations– In March 2019, the HK SFC released a “Statement on Security Token Offerings”, reminding operators that where security tokens are securities, any person who markets and distributes security tokens, whether in Hong Kong or targeting Hong Kong investors, is required to be licensed or registered for Type 1 regulated activity under the Securities and Futures Ordinance (SFO). Additionally, the Securities & Futures Commission of Hong Kong (SFC) published new rules just on Nov 6th this year that will govern exchanges via licenses and mandatory enrollment in a regulatory framework.
- Business– Family-owned property firm Stan Group — which represents the assets of “shop king” real estate scion Tang Shing-bor — is set to meet with Hong Kong’s securities watchdog in January 2020 to seek approval for the sale of tokenized real estate assets.
- Crypto Trading and Exchanges
- Mining- A veteran Chinese regulator has told those tasked with steering the strategic development of Sichuan province to tap surplus hydropower for the blockchain industry.
- Supply chain on blockchain– Walmart China plans to track food through its supply chain with VeChain’s Thor blockchain. Additionally, French retail giant Carrefour has seen an increase in sales after the implementation of a blockchain-based tracking system, mostly adopted in China.
- Device management on blockchain- Hong Kong’s flagship airline Cathay Pacific has introduced the first blockchain project to manage unit load devices (ULDs)
- Receipts and data on blockchain- WeChat Pay puts receipts on the blockchain, along with a screengrab of a receipt with a link to a block explorer. Additionally, blockchain solutions company PlatOn has created a platform for storing data and calculating the price of used business cars at Beijing Mercedes-Benz Sales Service (BMBS).
- Smartphones powered by blockchain– major phone operator China Telecom has released a white paper on blockchain-powered smartphones in the 5G Era.
- Government Support
- Special Economic Zone- On Aug. 18, the Central Committee of the Communist Party of China outlined the plans for the future development of the Shenzhen Special Economic Zone, including the research and promotion of digital funds and the national cryptocurrency based on the renminbi.
- Subsidies- The Guangzhou government has announced a $140 million subsidy fund to encourage the development of blockchain initiatives. Fuzhou, China is also offering rent subsidies to blockchain businesses in a bid to accelerate the industry’s growth.
- Smart city- Wanxiang Holding Co., Ltd has partnered with blockchain-based tech firm PlatOn to develop a “smart city” in Hangzhou.
- Identification- China continues to up its blockchain game with an independently developed blockchain-based identification system for cities as part of its smart city infrastructure.