Unregulated Crypto Store Makes Hong Kong Attractive Choice for Chinese Investors: Report

Chinese investors using Hong Kong OTC

Hong Kong has long had a thriving physical cryptocurrency trading store, many of which have escaped regulatory scrutiny. The specialized market has become particularly attractive to users in highly regulated mainland China, where usage is growing, the Financial Times reported Wednesday.

There are many virtual currency exchange shops in the urban areas of Hong Kong, and their performance is growing along with the increase in demand from mainland China. These stores allow the purchase of cryptocurrencies simply by showing them money, and most locations do not require KYC (identity verification). Some stores even have the slogan, “You can apply in as little as 10 minutes.”

Hong Kong has long been home to major cryptocurrency exchanges, boasting global trading volumes. The Hong Kong government introduced formal regulations on cryptocurrency trading for individual investors in June 2011, and is working to strengthen investor protection, including the introduction of a licensing system for trading platforms. However, these regulations do not apply to over-the-counter (OTC) exchanges, creating a regulatory gap.

Mainland Chinese investors are using OTC exchanges to take advantage of this regulatory gray area, and on one OTC exchange, more than half of the users buying cryptocurrencies are from mainland China. It says. Some stores allow transactions up to HK$100,000 without KYC, such as Coinhero, which acquired the ATM chain of former giant Genesis Block.

Coiner.HK, which has three stores, is running a campaign for members on social media. On their official website, they highlight, “Apply in as little as 10 minutes, no fees, no KYC, we provide instant quotes, and a dedicated concierge team to assist you through the entire process.”

Over-the-counter crypto trading firm Crypto HK, which has two branches in Hong Kong, has nearly half of its mainland customers now, up from less than 5% in February this year, according to a report by the FT.

connection:Hong Kong to enforce new rules for virtual currency exchanges from June

Cryptocurrency demand in Hong Kong

Hong Kong has seen an increase in demand for local cryptocurrency trading following the recent implementation of new rules for cryptocurrency exchanges and the announcement of plans to become a cryptocurrency hub in October. On the other hand, there are crypto stores such as One Satoshi that have a policy of not accepting customers from mainland China. % increase.

But some say the industry needs clear regulatory guidelines for its healthy development, and the Hong Kong government may eventually oversee the situation. “Government regulators should clearly dictate what we must do,” said Huang of crypto OTC platform OTCXpert.

Also, despite these conveniences and attractive opportunities, Chinese citizens who are highly interested in cryptocurrencies should be careful when using them. David (anonymous), a research consultant in Shanghai, shared his experience of buying cryptocurrencies in Hong Kong for the first time. , said it remains purely for investment purposes.

connection:Hong Kong to enforce new rules for virtual currency exchanges from June

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