China Money Not Flowing Into Crypto… YET? Here’s Why.

Boxmining

8.4K views 243 2 years ago

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It’s been 3 weeks since Hong Kong has opened up crypto to retail investors and we are still not seeing Chinese money flowing into the crypto market. In this video, we are going to explore the possible...

It’s been 3 weeks since Hong Kong has opened up crypto to retail investors and we are still not seeing Chinese money flowing into the crypto market. In this video, we are going to explore the possible reasons why China money is still on hold, the unique relationship between China and Hong Kong, and the impact of regulatory uncertainties and SEC lawsuits on Chinese investors. 🌼 GET $30,000 in rewards on Bybit: https://partner.bybit.com/b/boxyt ●▬▬▬▬▬▬▬Chapters▬▬▬▬▬▬▬● 0:00 Introduction 2:06 Hong Kong VASP Licenses 3:18 Crypto Ban in China 5:41 SEC lawsuits 6:06 Conclusion ●▬▬▬▬▬▬▬Recommendations▬▬▬▬▬▬▬● 📲Binance Exchange: http://boxmining.co/binance 📖 Guides, tutorials and insights: https://boxmining.com/ 🔒Hardware Wallet: http://boxmining.co/ledger 👍🏻Brave Browser: http://boxmining.co/brave ●▬▬▬▬▬▬▬▬▬▬Community▬▬▬▬▬▬▬▬▬● Boxmining clips: https://www.youtube.com/channel/UCjFy3VBgOZanySOLhQu6GaQ Boxmining News Website: https://www.boxmining.com/ Telegram Group: https://t.me/BoxminingFam ●▬▬▬▬▬▬▬▬▬▬▬Social▬▬▬▬▬▬▬▬▬▬▬● Twitter: https://twitter.com/boxmining Discord: https://discord.gg/9qCpqpZm8G Facebook: https://www.facebook.com/boxmining ●▬▬▬▬▬▬▬▬▬▬DISCLAIMER▬▬▬▬▬▬▬▬● Boxmining, including its employees, are not affiliated with and do not endorse or sponsor any token sales, initial coin offerings, initial exchange offerings and/or airdrops (the “token sales”) unless clearly disclosed. The contents of these videos are for information purposes only. Boxmining and its employees do not provide investment advice and do not take one’s personal circumstances into consideration when providing information about token sales and cryptocurrency exchanges or platforms. In light of the above, Boxmining and its employees may hold the cryptocurrencies mentioned in the videos. Please note that there are legal requirements in various countries that may restrict token sales, and furthermore, the access to, and products and services provided by any of the cryptocurrency exchanges or platforms mentioned in these videos. Consequently, the contents of this video are not directed at or intended to be accessible by persons in any jurisdiction where the extension of the availability of the materials to which you are seeking access would breach any applicable law or regulation. Decisions to participate in token sales or to buy, sell or hold cryptocurrencies, as well as the access to and use of any cryptocurrency exchange or platform involves risk. You are also responsible for informing yourself about and observing any restrictions and/or requirements imposed with respect to any such token sale, or the access to and use of any cryptocurrency exchange or platform. You must use your own judgment or consult a professional for advice on such matters.

AI Analysis

It was widely anticipated that Chinese retail investors would flood back into crypto, driving up market prices significantly, with some even hoping for Bitcoin to reach $40,000, $60,000, or even $90,000. However, despite Hong Kong legalizing crypto trading three weeks ago, this expected surge hasn't materialized, leaving many wondering why the performance has been so lackluster, especially for altcoins. This slower-than-expected movement stems from several key factors, including the ongoing VASP licensing process in Hong Kong, China's continued official ban on crypto despite Hong Kong's relaxed stance, and the chilling effect of regulatory uncertainties and SEC lawsuits in the United States.

Here's a breakdown of what's happening and why Chinese money isn't flowing into crypto en masse yet:

* VASP Licenses Not Yet Issued in Hong Kong: A primary reason for the slow pace is that Hong Kong has only just started accepting applications for Virtual Asset Service Provider (VASP) licenses since June 1st. This means that major crypto exchanges are still in the lengthy process of applying, and no big trading activities are happening yet. For example, OKEx has been working on their application paperwork for a year already and hopes to submit it by year-end, which suggests approvals will take at least another six months. The general feeling is that exchanges are keen to get a Hong Kong license because they believe it will establish a crucial foothold in China when the mainland eventually opens up to crypto.
* China's Official Crypto Ban and "One Country, Two Systems": Despite Hong Kong's move, crypto remains officially banned in mainland China. This is crucial because Hong Kong operates under a "one country, two systems" policy, meaning it's part of China but maintains economic autonomy. While people in China can still use VPNs to trade, it's highly risky and suspicious for large investors ("whales") to move massive amounts of money from their banks into crypto, as they could easily get caught.
* Hong Kong as China's "Testing Bed": China is essentially treating Hong Kong as a testing ground for crypto. With Hong Kong's 7 million people compared to China's 1.4 billion, it's seen as a smaller, manageable space to experiment with crypto legalization. Historically, whatever works well in Hong Kong is often adopted by mainland China. The Web3 Festival in Hong Kong and an interview with Rio DeFi CEO James Anderson confirmed this view, describing Hong Kong as a "sandbox" for financial innovations, including crypto and blockchain, that could eventually be brought back to the mainland. The belief is that China needs the data from Hong Kong's performance before it considers legalizing crypto on a larger scale.
* Impact of US SEC Lawsuits and Regulatory Uncertainty: The unclear regulatory environment in the US, particularly the SEC's approach of "regulating through enforcement" (i.e., through lawsuits), is causing significant pressure and uncertainty in the global crypto market. This has a ripple effect, making Chinese investors and businesses hesitant to commit funds until the market stabilizes and these SEC lawsuits are resolved.
* Hong Kong Capitalizing on US Missteps: Hong Kong and China are strategically taking advantage of the US's regulatory challenges. Hong Kong Legislation Council member Johnny Ng has openly invited global virtual asset trading operators, including Coinbase, to apply for VASP licenses in Hong Kong, even assisting them with the process. This demonstrates a clear intent by Hong Kong and China to regulate through engagement and collaboration, rather than the enforcement-heavy approach seen in the US.
Still Early in the Process: Overall, it's important to understand that the market is still in its planning and registration phase for Chinese money. The presenter strongly believes that Chinese money will flow in, and China will* start legalizing crypto, but only once Hong Kong's crypto exchanges are operating smoothly and the testing phase proves successful. This indicates a patient, calculated approach by China and Hong Kong to integrate crypto into their financial systems.

Transcript

So let's be direct about this. There's a huge expectation that the Chinese retail investors are going to move back into crypto and massively move up the markets. This was the prevalent for the early last year. In fact, people were expecting up and kind of hoping for upwards of $40,000, $60,000, or maybe even $90,000 as full retail charges in from China back into crypto. But to be frank, recently, the performance of the Chinese seems to be lackluster, right? If you look at what has happened rece...

So let's be direct about this. There's a huge expectation that the Chinese retail investors are going to move back into crypto and massively move up the markets. This was the prevalent for the early last year. In fact, people were expecting up and kind of hoping for upwards of $40,000, $60,000, or maybe even $90,000 as full retail charges in from China back into crypto. But to be frank, recently, the performance of the Chinese seems to be lackluster, right? If you look at what has happened recently, sure, Hong Kong has legalized crypto trading, but are recent movements not nearly what people are expecting? Especially when it comes to all-coin performance too, people are expecting 100xs on certain all-coins. So what exactly is happening? Are things moving ahead? Are the Chinese really coming back in? Some people are thinking Chinese are not going to come in at all because China really doesn't like crypto and what's happening in Hong Kong is just an outlier. Honestly, let's clarify things up. Let's explain why things are going so slow in terms of the Chinese retail moving back into crypto, but also it's slow. Doesn't mean it's not moving, right? What we have done is we brought in Natalie. So Natalie's been researching what's happening in the Chinese markets non-stop for the past three months. She's been looking hardcore into what regulations have been passed in Hong Kong, what is happening, and also what is making things take so long. So Natalie, you're going to take this segment? Yes. Awesome. So she's going to fill in on all the details. Okay, now we don't need you anymore. And if you guys want to see what is happening in Asia, make sure you stay tuned. BoxMoney, we have a particular focus on Asia coming soon. I think there's a lot building up, but it's going to take us some time. So we're going to be honest and truthful about what is happening in Asia. So stay tuned to this channel and make sure you're subscribed as well. Let's get started with Natalie. Martin, here's $10 to invest in the futures market. Sorry! Sorry! Sorry! So our first point is, licenses have not been handed out in Hong Kong yet. Therefore, there are no big trading activities happening in Hong Kong right now, as crypto exchanges are still in the process of applying for a license in Hong Kong. Let's take a step back. Hong Kong has just started accepting VASC licenses to crypto exchanges since 1st of June, which means crypto exchanges and crypto companies who want to operate in Hong Kong have started their registration phase. And as we've mentioned in our previous video, the managing director of OKEx, Lennox Lai says that they have been working on their application paperwork for a year prior to June 1st. And they're hoping to submit all of their paperwork by end of year, meaning that it'll take at least another half a year for applications to get approved. And one of the main reasons why exchanges are keen on getting the Hong Kong VASC licenses is because they believe that if they get a license in Hong Kong, that means they will have established foothold in China when China opens up to crypto. So a little bit of history lesson for you guys. China and Hong Kong operate under a one country, two system policy. This basically means that Hong Kong is part of China, but they have autonomy over their own economic system. And this brings us to our second point. Although China is very optimistic about crypto, as we can see from the news, legally speaking, crypto is still officially banned in China. Sure, people in China can still use VPN to trade. But we're talking about huge wells who are investing billions of dollars in crypto. These whales will have to take a huge chunk of money from their banks and move it to crypto, which will be very suspicious and risky for them, and they might get caught. China is basically treating Hong Kong as a testing bed for crypto, because there are 7 million people in Hong Kong and 1.4 billion people in China. China is trying to test out crypto in a smaller space. And if this goes well, we might see China legalizing crypto soon. Since China needs the data they get from Hong Kong to know whether legalizing crypto will work in China. Because historically speaking, whatever works in Hong Kong, they'll bring it to China. We went to the Web3 Festival in Hong Kong, and we did an interview with Rio DeFi CEO James Anderson. And he summarized perfectly the working relationship between Hong Kong and China in terms of financial innovations and development. Let's watch the clip. Okay, James. So Hong Kong is really opening up a lot of mainlanders coming over to Hong Kong. Do you think Hong Kong is a stepping stone for China in terms of crypto? Absolutely. I mean, I think Hong Kong has kind of been set up as the sandbox for mainland China for so many things, you know, obviously, that's what they did in traditional finance, all the investment banks kind of building out in Hong Kong, and then what works in Hong Kong bring back to China. I think the same is true with crypto blockchain. So, you know, see what works. They have a lot of vast licenses going out this year, virtual asset service provider licenses here in Hong Kong. I think they're going to see how it plays out. And if you know, if everything seems good, bring it into mainland China. Yeah, and I think China could lead the next bull market in crypto. Oh, okay. All in all, we're still in the testing phase right now. And big Chinese players will not move until Hong Kong is performing well. And we'll know if Hong Kong is performing well, once vast licenses has been approved, and crypto exchanges start operating in Hong Kong. And as we all know, there are still unclear regulations in the US, the SEC have been regulating through enforcement, forcing a lot of crypto exchanges to move elsewhere, and causing a rippling effect in the crypto market. There are also a few ongoing lawsuits between the SEC and crypto exchanges, applying huge pressure on the market. We've actually covered it in detail in our previous videos. So make sure you check it out. So all in all, this has caused a lot of uncertainties in Chinese investors and businesses, and they have been holding off investing until market stabilizes and SEC lawsuits are done and dusted. In conclusion, Hong Kong and China is really taking this opportunity to capitalize on the mistakes of the US. For example, Hong Kong Legislation Council member Johnny Ng actually posted a tweet offering an invitation to welcome all global virtual asset trading operators, including Coinbase to start applying for vast licenses in Hong Kong. And he's already in contact with Coinbase right now, assisting them with their application process. As we can see, Hong Kong and China is doing what the US is not doing, regulating through engagement and not enforcement. We're still in its planning and registration phase, and we're still very early right now. We believe that China money will flow in and China will start legalizing crypto once we see Hong Kong crypto exchanges operating smoothly. So that concludes our video for today. Thank you for watching. I will also like to take the time to thank our sponsor for today, Bybit. If you haven't signed up for Bybit, you can sign up with our link down below and you'll automatically get 20 USDT in your derivatives account. And if you enjoyed today's video, don't forget to like, share and comment down below to let us know what you think. And we will also be doing more videos on the China market. So make sure you subscribe to our channel. And until next time, bye!