China is once again placing restrictions on crypto activities within its borders. Officials recently proposed protocols concerning how crypto-related financial trials should be handled, setting strict parameters on the validity of certain legal acts. The Chinese government is aiming to counter high-risk activities associated with cryptocurrencies, particularly those involving investment or mining contracts entered after their respective bans were implemented in 2017. While China has been effective in banning crypto mining, businesses have found ways to operate underground and officials have used measures such as fines to show that the rules surrounding cryptocurrencies are taken seriously.

In contrast to China’s restrictions, Hong Kong has taken progressive steps towards becoming an accessible center for crypto businesses. The region laid out plans to welcome Chinese crypto firms, asked banks to provide services to crypto firms, and declared its intentions of becoming an “international virtual asset center.” This indicates Hong Kong’s commitment to becoming an attractive hub for the digital asset industry, and suggests that it has the potential to provide the cypto space an advocate when compared to its neighbor in the East.

China’s future concerning the crypto environment is uncertain. In order to put effective laws and regulations into place, officials need to ensure that they are taking a well balanced approach to the risks and potential of blockchain-based technologies. At present, it appears there is tension between the risk averse stance of regulators and the ambition of audacious entrepreneurs.



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