In-depth study on cryptocurrency development in Hong Kong

Project Background

Cryptocurrency is a form of digital or virtual  currency that relies on cryptography for security. It operates on distributed, decentralized ledger technology called blockchain, which makes it different from traditional currencies that are issued and regulated by governments. using blockchain can also ensure transparency and immutability of transactions, making them difficult to manipulate. Another benefit of blockchain is it allows faster and cheaper cross-border transactions since it does not require middle parties like banks.

The emergence of cryptocurrency has heralded a new era in global finance, challenging traditional notions of currency, payment systems, and financial intermediaries. After the 2008 white paper by Satoshi Nakamoto (Bitcoin’s mysterious creator) revealed the blockchain system of cryptocurrencies, the rapid evolution of digital currencies has sparked a wave of innovation in the financial technology world.

As a decentralized digital payment system, cryptocurrencies have gained more acceptance and popularity in the past decade. Large tech companies like AT&T and Microsoft started accepting cryptocurrencies for products on their websites. Up to this date, there are also countries that allow the use of cryptocurrencies, such as the United States, the European Union, Japan and many more. 

Recognised as an international financial center, Hong Kong has been consistently showing interest on cryptocurrency related development like Web3.0 projects, rules are proposed and launched to let retail trades trade certain types of cryptocurrency. Although the Hong Kong government has a positive stance on the use of cryptocurrency, the scam crimes related to cryptocurrency in Hong Kong have seriously damaged the trust and interest of the public. According to studies, 70% of the online investment scams reported from January 2022 to October 2022 are cryptocurrency related. Another famous example is the recent case of JPEX, an unregulated crypto trading platform that is suspected to have defrauded its users.

Even with its uncertainty and immaturity, it is without a doubt that cryptocurrencies will be the future of the financial world. Therefore, if Hong Kong would like to become a crypto-hub and lead the world in this area, further regulation had to be proposed to ensure its safety and to protect the public from scams.