Justin Sun Says Hong Kong’s New Licensing Regime Could Shift Policy in Mainland China, Eventually

The city of Hong Kong is looking to become a virtual asset hub as soon as this summer.

Justin Sun, founder of the Tron blockchain and the man who runs the Huobi crypto exchange, is ready for that change. He said in a tweet Monday that Huobi would apply for a virtual asset service provider (VASP) license in Hong Kong under new requirements to operate that go into effect in June. If approved, the exchange would then launch Huobi Hong Kong.

“Eventually, since Huobi is one of the leading blockchain exchanges in the region … I definitely [have] confidence Huobi will secure the license,” he told CoinDesk TV’s “First Mover” on Wednesday.

Huobi, which ranks 15th in overall trading volume according to CoinMarketCap data, is one of the exchanges seeking a license to operate in Hong Kong’s crypto market. Seychelles-based crypto exchange OKX, which ranks eighth in overall trading volume, also plans to apply for a license in the city.

And then there's the looming presence of China.

“Beijing sees Hong Kong as one of the experiment zones for cryptocurrency,” Sun said.

The Chinese government's relationship with crypto has been tumultuous. Two years ago, regulators cracked down on crypto trading and mining.

Sun thinks China is looking at Hong Kong as a kind of experiment, to see if crypto can be regulated on the mainland. If Hong Kong suceeds it could create a change of attitude in Beijing. "So that's why they want to see Hong Kong do it first," he said. "And then you see the result. If it has positive feedback, they might change the policy in mainland China as well."

The new requirements don't necessarily mean crypto will be available to Hong Kong retail traders, but at least for now Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), has extended a lifeline to crypto companies.

“That’s why I think right now [the] Hong Kong government is taking a very transparent and flexible way to discuss crypto regulation with market participants,” Sun said. He added the Huobi exchange has been in talks with SFC regulators to discuss the future of stablecoin regulation.

“I believe Asia’s capital will be a driving force for the next bull run for [the] crypto market,” he said.

See also: The Future of Crypto Markets Will Be Driven by Developments in the East

CORRECTION (Aug. 8, 2023, 15:04 UTC): Fixes reference to OKX to say the company plans to apply for a Hong Kong license, not that it already has.