Australia-based cryptocurrency exchange Independent Reserve is looking to set up shop in Hong Kong as Hong Kong continues its efforts to become a cryptocurrency hub.
Hong Kong’s Securities and Futures Commission (SFC) released its proposed cryptocurrency exchange licensing regime on Feb. 20, which will come into effect in June, in pursuit of its ambition to become Asia’s next cryptocurrency hub. Independent Reserve co-founder and CEO Adrian Przelozny told Cointelegraph that the “friendly” licensing regime makes Hong Kong a worthwhile destination for a new base, something his firm is now seriously considering.
“We see Hong Kong as a good opportunity for Independent Reserve and we are always looking for new regions in Asia where we can expand our business,” he added. The potential move would follow that of its peers Huobi and OKX. Under the new licensing regime, cryptocurrency firms in Hong Kong must comply with various measures related to safekeeping of assets, such as anti-money laundering, know-your-customer, countermeasures against financing terrorism, and conflict of interest disclosure and auditing.
Przelozny said his team will visit Hong Kong next week to meet with banks, regulators, lawyers and compliance experts to determine whether the location is suitable for the company. Commenting on the region’s political relationship with China, Przelozny argued that China is testing how a more permissive cryptocurrency regime could play out in Hong Kong.
If successful, he believes China may follow suit: “The Chinese government is using Hong Kong as a testnet to experiment with a more permissive cryptocurrency regime to see what impact it has on the business environment there. If they think it’s a positive thing, then I think they have an opportunity to roll it out in China and loosen existing restrictions." Tron CEO Justin Sun made similar remarks in a December 2022 interview with Bloomberg.
He believes that China is using Hong Kong as a "testing ground" to ultimately determine its policy stance. However, Przelozny cautions that this may only be a "temporary experiment" that could be reversed in the future. If Independent Reserve is satisfied with the regulatory environment, Przelozny said the final checkboxes to be ticked would be how much it would cost to set up shop there and what it thinks is the return on investment in doing so.
Independent Reserve operates in Singapore as a licensed virtual asset service provider. It also recently launched Bitcoin.com.au after purchasing the domain name for US$2 million (A$3 million). More than 80 cryptocurrency companies in mainland China and elsewhere have recently expressed interest in establishing operations in Hong Kong, according to a March 20 statement from Financial Services and Treasury Secretary Christian Hui.
