Australia-based crypto exchange Independent Reserve is looking at opportunities to set up shop in Hong Kong as the city continues efforts to become a cryptocurrency hub.
Set to take effect in June, the Hong Kong Securities and Futures Commission (SFC) released a proposed licensing regime for cryptocurrency exchanges on Feb. 20 in line with its ambitions to become Asia’s next crypto hub.
Independent Reserve co-founder and CEO Adrian Przelozny told Cointelegraph the “friendly” licensing regime makes Hong Kong a worthy destination to set up a new base, something his firm is now strongly considering.
“Right now, it is looking very interesting [...] The recent announcement by the regulators in Hong Kong does make Hong Kong look like a friendly jurisdiction.”
“We see Hong Kong as a good opportunity for Independent Reserve, and we’re always looking at new areas in Asia where we can expand our business,” he added.
The potential move would follow the likes of its peers Huobi and OKX.
Under the new licensing regime, Hong Kong-based crypto companies must comply with various measures relating to the safe custody of assets, such as Anti-Money Laundering, Know Your Customer, counter-financing of terrorism countermeasures, and conflict of interest disclosures and audits.
Przelozny said his team is visiting Hong Kong next week to meet with banks, regulators, lawyers and compliance experts to determine if the location suits the company.
Commenting on the region’s political relationship with China, Przelozny believes China is testing how a more relaxed cryptocurrency regime looks 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 looser cryptocurrency regime to see what impact that has on the business landscape there. If they see it as a positive thing, then I think there’s a chance they'll roll it out through China and loosen their existing restrictions.”
Similar remarks were made by Tron CEO Justin Sun in a December 2022 interview on Bloomberg.
He believes that China is using Hong Kong as an “experiment base” to make a final decision on its policy stance.
Related: Hong Kong’s crypto ambition gets subtle nod from Beijing: Report
However, Przelozny is cautious that it may only represent a “transitory experiment” that could be reversed in the future.
If Independent Reserve is satisfied with the regulatory landscape, Przelozny said the last checkbox to tick would be how expensive it is to open up shop there and what it thinks the return on investment will be for doing so.
Independent Reserve operates as a licensed virtual-asset service provider in Singapore.
It also recently launched Bitcoin.com.au after purchasing the domain name for $2 million (3 million Australian dollars).
Longstanding Australian crypto exchange Independent Reserve has bought https://t.co/caP4K5Kwnn.https://t.co/ococz49Hwe pic.twitter.com/lRHaPi5vhe— Independent Reserve (@indepreserve) March 23, 2023
Over 80 cryptocurrency firms across mainland China and elsewhere have expressed interest in establishing a presence in Hong Kong of late, according to a March 20 statement by Christian Hui, the Secretary for Financial Services and the Treasury.
Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips