Recently, hundreds of thousands of Hong Kong natives took to the streets to protest the proposed extradition treaty with China. They expressed the concern that the bill will erode the legal autonomy that the city currently enjoys.
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For the purpose of this article, we will discuss the effects of this extradition treaty on cryptocurrency trade in Hong Kong.
Hong Kong was handed over to China in 1997 by the UK. It currently enjoys a semi-autonomous political and legal jurisdiction. The proposed bill states that citizens and foreigners that reside in Hong Kong will be taken and tried in mainland China if authorities suspect them of crime.
Despite the demonstrations, Hong Kong’s chief executive insisted that Hong Kong will press on with the bill. She stated that the bill is necessary to allow Hong Kong to uphold justice better and fulfill international obligations.
What is the effect of the proposed extradition treaty on foreign businesses and cryptocurrency?
It is common knowledge that China is openly hostile to the trading of cryptocurrency. According to Marco Rossi, a technology reporter, the centralizing and totalitarian nature of the Chinese state clashes with the essence of cryptocurrency trade.
China views cryptocurrency as a system that allows too many loopholes to fraudsters. Investors and businesspeople see China’s hostile approach as a way to enforce monetary control.
Due to this principle contradiction, many businesspeople preferred to conduct their businesses through Hong Kong. They considered it a safe-haven for investors and traders.
Challenging the sovereignty of Hong Kong by the extradition treaty brings concerns to investors. It subjects them to the harsh communist legislations of mainland China.
Foreign investors fear that Beijing and China may use the treaty to circumvent the International Business Community policies in place.
China Has Not Banned Crypto
Although China is quite harsh on Bitcoin, Ethereum, and other cryptocurrency trade, it has not entirely banned people from holding crypto. The country has however halted all Initial Coin Offering (ICO), and payments using virtual currency. There have been no such regulations in Hong Kong yet. Hong Kong still allows the use of Bitcoin and other cryptocurrencies as usual.
The Hong Kong government currently has a free market, low taxes, and very little interference from the government on cryptocurrency related businesses. The implementation of the extradition treaty means that Hong Kong will be subject to all the regulations by mainland China.
Businesspeople in Hong Kong may flee from the city to avoid such regulations.
In Conclusion, will the extradition treaty harm cryptocurrency?
Yes, Hong Kong’s extradition treaty with China raises concerns over the progressive legislative encroachment of mainland China into Hong Kong. Considering the harsh treatment of cryptocurrency trade by China, Hong Kong residents, investors, and crypto enthusiasts worry about what the future of cryptocurrency will look like in Hong Kong.
China views a majority of the ICOs as fraudulent and recently banned all Initial Coin Offerings and payments using cryptocurrency, moreover, reports have it that China is planning on developing their sovereign cryptocurrency. It will enforce financial control beating the original purpose of cryptocurrency development, which was to decentralize the monetary system.
Of course, Chinese officials maintain that Beijing and mainland China did not have anything to do with the law, but observers think that the extradition treaty is just the first step. There are likely to be more amendments and legislation that will shift the sovereignty and independence of Hong Kong back to mainland China.