TechFlow news, September 24 — Caixin reported details on multiple types of institutions being instructed to scale back their crypto-related operations in Hong Kong. Internet platforms, Chinese-funded securities firms, and Chinese-funded banks operating in Hong Kong have been asked to suspend various activities involving digital assets, including investments, trading, issuing RWAs, and stablecoins. In particular, securities firms that have obtained the "virtual asset trading service" license are under close scrutiny, as clients can directly trade Bitcoin, Ethereum, Tether, and other cryptocurrencies through their accounts. From an asset classification perspective, Hong Kong divides virtual assets into security-type and non-security-type virtual assets. Chinese enterprises face varying degrees of restrictions when engaging in cryptocurrency-related businesses such as investing in cryptocurrencies, listing domestic assets as RWAs overseas, providing cryptocurrency trading services, or issuing stablecoins. The fundamental reason for restricting different types of institutions from investing in or trading virtual currencies is to avoid potential systemic and dependency risks that may arise if mainland entities become integrated into a system tied to USD-pegged stablecoins and unbacked virtual currencies.
It is reported that the "treasury company" model will be restricted. During this wave of cryptocurrency innovation, the practice of leveraging crypto asset investments through treasury companies has been rapidly replicated. Numerous Chinese enterprises listed on the Hong Kong and U.S. stock exchanges have announced purchases of Bitcoin, Ethereum, and other crypto assets, aiming to profit from both stock and token price appreciation. However, this model is highly likely to be curtailed.
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