### While Crypto trading and mining is banned in mainland China, Hong Kong is coming up with regulations to allow crypto. This could be quite good for crypto.

It is well known that the demand for Crypto in China is high. However, at present, crypto trading is not allowed at all in the mainland. In mid 2021, there was a mass shutdown of cryptocurrency mining equipment in China as the government swiftly moved to ban the activity. 

Bloomberg reported on the crackdown in a June 21, 2021 [article](https://www.cnbc.com/2021/06/21/bitcoin-btc-price-drops-on-china-crypto-mining-crackdown.html#:~:text=Many% 20bitcoin%20mines%20in%20Sichuan,shut%20down%2C%20the%20paper%20said). 

At that time, it was estimated that 65% of bitcoin mining was performed in China. Shortly after the crackdown on cryptocurrency mining, China's government trained its sights on retail cryptocurrency trading and sought to stop the activity. 

Reuters reported on this back in September 25, 2021 [here](https://www.reuters.com/world/china/china-central-bank-vows-crackdown-cryptocurrency-trading-2021-09-24/). 

This tight grip on crypto has continued to date. In contrast to the mainland, the Hong Kong securities watchdog will propose a short list of tokens that will be legal for retail investors to trade. 

This is part of an effort to make the city more friendly to crypto startups. It appears that Hong Kong doesn't want to lose out on the lucrative, nascent crypto industry. 

Hong Kong's Securities and Futures Commission (SFC) remains committed to protect investors, and this will be the focus of the new virtual asset service provider (VSAP) regime. 

Julia Leung of the Hong Kong SFC said the following about virtual assets as a whole: "The good thing is that when the froth is taken out from the system as platforms and some tokens collapsed, it focuses investors and sellers' minds on investor protection." 

The Hong Kong SFC will receive applications for VASP licenses as early as 2024. All trading platforms and exchanges will be required to apply for a license. 

Hong Kong's opening to retail crypto trading is ostensibly to be able to make Hong Kong a potential home for crypto start ups but we are hoping that there is more to the story. Perhaps Hong Kong's experience can be used by the mainland as a sort of 'proof of concept' for crypto regulation for the rest of China.

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