US crackdown will push crypto’s 'center of gravity' to Hong Kong: Kaiko CEO

The U.S. government’s frosty approach to cryptocurrency regulation could ultimately see the industry’s “center of gravity” shift to Hong Kong, says Ambre Soubiran, the CEO of Paris-based institutional crypto market data provider Kaiko.

The U.S. has been at the forefront of the crypto sector for quite some time, however, with the government seemingly adopting a regulation by enforcement approach, there is a growing feeling by some that a significant amount of companies, developers and investors will soon flock elsewhere to work in friendlier environments.

1 million tech jobs are at risk of going overseas. As the U.S. goes down a path of regulatory uncertainty, the EU, UK, UAE, Hong Kong, Singapore, Australia, and Japan are all creating environments for crypto to flourish so that they can capitalize on the next wave of innovation. pic.twitter.com/2UMkFxajcM

— Coinbase (@coinbase) March 29, 2023

Speaking with the Wall Street Journal on April 1, Soubiran suggested that the recent crackdown on crypto in the U.S. will inadvertently help Hong Kong in its goal of becoming a major crypto hub:

“The U.S. being more stringent these days than ever on crypto and Hong Kong regulating in a more favorable way…is going to clearly shift the center of gravity of crypto assets trading and investments more towards Hong Kong.”

“We want to be where our clients are,” she added.

While the U.S. government has become increasingly aggressive towards crypto since the collapse of FTX in November — with Senators such as Elizabeth Warren even recently stating that they are building an “anti-crypto army” — Hong Kong has been pushing in the other direction.

“This industry we’ve been trying to destroy, that’s grown to a trillion dollars in value, and that rallied 30% as our banking system required a $2 trillion backstop, and in 10 years added 10,000s of American jobs…

Has no value or good qualities.”

-The White House

— Ryan Selkis (@twobitidiot) March 21, 2023

The Hong Kong government initially outlined plans in January to become a hub by rolling out progressive regulation to support high-quality crypto and fintech firms in 2023.

While the regulation is yet to be fully ironed out, Hong Kong’s Securities and Futures Commission (SFA) proposed a crypto licensing regime on Feb. 20, focused on providing consumer protections without stifling innovation.

So far, more than 80 virtual asset-related firms have expressed interest in setting up shop there, according to a March 20 speech from Hong Kong’s Secretary for Financial Services and the Treasury, Christian Hu.

He also noted that 23 crypto firms in particular have already indicated that “they planned to establish their presence.”

Adding to the positivity surfacing from the special administrative region of China, Bloomberg reported on March 28 that the Hong Kong Monetary Authority and SFA are set to hold a joint meeting on April 28 to help crypto firms set up domestic banking partnerships.

Make Hong Kong Great Again!!! pic.twitter.com/K8FV55R1cb

— Arthur Hayes (@CryptoHayes) March 28, 2023

Chinese banks such as Shanghai Pudong Development Bank, the Bank of Communications Co. and Bank of China Ltd., have reportedly either started offering banking services to crypto firms in Hong Kong or made inquiries with crypto firms.

Soubiran also revealed in mid-March that Kaiko itself, is looking to relocate the headquarters of its Asian-Pacific unit from Singapore to Hong Kong, in response to the country’s friendly crypto stance.

“What we’re seeing is a clear support for more clarity on the regulatory framework in Hong Kong,” she told Bloomberg in an interview, adding that “while we’re seeing an increased attractivity of Hong Kong in the region, we are relocating.”