Earlier this week, crypto exchange FTX announced they successfully registered with the Securities Commission of the Bahamas as a digital assets business under the Digital Asset Registered Exchanges (DAREs) Bill.
Previously, FTX was headquartered in Hong Kong and was so since its inception in 2019, following CEO Sam Bankman-Fried’s move there in 2018.
However, for digital asset companies based in the former British colony, an increasingly hostile stance towards crypto is forcing many to look elsewhere.
While neither FTX nor its representatives have gone on record to state this explicitly, others have come forward to describe a regime that is moving against cryptocurrency.
In June, Bankman-Fried chose to vent his frustrations with living in Hong Kong over its tough quarantine rules. There was no mention of anti-crypto sentiment within his tweetstorm.
The writing was on the wall for FTX
The FT states that Hong Kong is losing its position as an international business hub due to China’s tightening grip on the region.
“Beijing’s imposition of a national security law last year has prompted many multinational companies to rethink their commitment to the Chinese territory.”
On how that impacts doing business as a crypto company, the FTX boss said he’s aware that Hong Kong is bringing legislation that will require all exchanges operating there to be licensed.
It’s rumored that the upshot to this could see only wealthy professional traders allowed to participate in crypto trading. Which, if true, violates the primary purpose of cryptocurrency – that is, being open to all.
In July, Bankman-Fried said a ban on retail investors would force FTX to leave Hong Kong. While that hasn’t happened yet, his referral to Hong Kong in the past tense was telling in so far as him wanting to leave.
“I’ve loved my time here . . . but in the end, what’s important is that we’re in the right place for the business.”
A brief history of Hong Kong
The British annexed Hong Kong as an indemnity for fighting the Opium Wars as agreed under the Treaty of Nanjing.
They subsequently built infrastructure and brought free-market policies, which allowed the region to flourish, especially during the 1970s. Due to low levels of government inference, doing business in Hong Kong was easy, and the region became a gateway into Asia.
But in 1984, British Prime Minister Margaret Thatcher and Chinese Premier Zhao Ziyang signed an agreement to return Hong Kong to China on July 1, 1997. A condition of the agreement was the Chinese guaranteeing a 50-year extension on the existing legal framework.
Meaning 2047 should have been when Hong Kong finally reverted to full mainland control.
But as evidenced by enforcement of the national security law, which effectively put the region under martial law as a response to protests, Beijing has reneged on that agreement.
It’s well known that Beijing takes a negative view of cryptocurrency trading and mining. With that, it’s surprising FTX didn’t move sooner.
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