Hong Kong, which many consider as the Asian center of financial and technological development, is struggling to see consistent growth in its Fintech and Bitcoin markets.
Other Asian countries such as China, Japan, South Korea and Singapore have outcompeted Hong Kong by creating a practical and efficient ecosystem for startups and financial service providers to operate in.
China and South Korea in specific have laid out sound regulations and policies within their Fintech and Bitcoin markets, allowing startups and mature corporations to follow a clear regulatory framework to remain compliant with industry-wide policies and local financial regulations.
Such clarity in established regulatory frameworks for the Bitcoin industry in South Korea has allowed startups, including leading Bitcoin exchange Korbit, to raise multi-million dollar investment rounds from key players of the South Korean financial and technology industries. To date, Korbit has amassed funding from multi-billion dollar South Korean companies including SK Planet and SoftBank Ventures Korea.
While startups in South Korea, China, Japan and Singapore are successfully securing reliable investment partners to form a long-term vision and financial stability, Bitcoin companies in Hong Kong are failing to obtain investment primarily due to the uncertainty in local regulations.
In an interview with South China Morning Post, Bitcoin entrepreneur James Bang stated:
“The uncertainty is why [Bitcoin companies] could not get investment. Investors don’t like uncertainty.”
Leo Weese, president of the Bitcoin Association of Hong Kong, further stated that the initiation of Bitcoin operations and trading within Hong Kong shouldn’t be a concern for regulators and that the government should allow the general population to trade and utilize Bitcoin at their own risk, similar to the approach of the central bank of China.
In the past, the People’s Bank of China consistently emphasized that the government nor the central bank will take any responsibility for risks involved in trading Bitcoin. Upon the issuance of the initial warning, the central bank of China allowed active Bitcoin trading and other activities involving the digital currency within the region.
“I think regulators should be less risk averse, it is not their obligation to shield the Hong Kong economy from people losing money or other negative things,” said Weese.
In spite of the lack of regulatory framework within the Hong Kong Bitcoin industry, government officials, including information technology legislator Charles Mok, are continuously claiming that it is the limited applicability and practicality of Bitcoin that is preventing the Bitcoin industry in Hong Kong from growing at a similar pace to other countries.
However, the logic behind Mok’s claim is evidently flawed as the applicability and practicality are being demonstrated in leading markets such as Japan, South Korea, Singapore and China, all of which have laid out clear regulatory frameworks for both Bitcoin operators and users.
Cointelegraph reported that former Bank of China Governor L H Li believes China should regulate Bitcoin instead of trying to slow down the growth of Bitcoin as it is virtually impossible to stop a decentralized and peer to peer network secured by miners and hash power spread across the world.
A regulated Bitcoin market is important not necessarily for the people but for the government because if Bitcoin moves to underground or over-the-counter markets, it becomes increasingly difficult for the government to oversee its use.