What’s behind Hong Kong’s approach to crypto? Kaiko dives in

[ad_1]

The Hong Kong Securities and Futures Commission (SFC) has taken a new approach to the crypto industry. This new way of regulating the nascent industry could benefit the crypto market and bring a new wave of capital to the biggest digital assets in the ecosystem.

On Monday, Hong Kong made clear its intention to open the door to crypto trading in the Asian region in what appears to be a completely different approach to the enforcement actions taken by the US Securities and Exchange Commission (SEC). United.

Digital asset market data provider Kaiko weighed in on the matter in a recent blog post, suggesting that Asia appears to be positioning itself at the forefront of the next digital asset revolution by welcoming commerce of cryptography. Kaiko Research analyst Conor Ryder said:

An alluring East could well be the next catalyst that propels crypto prices higher, with some proclaiming that this race has already begun, propelled by an Asia-linked token rally.

Why Hong Kong’s Sudden Crypto-Friendly Policy?

Why, after a tumultuous year, low prices and debacles from exchanges and companies like FTX, Hong Kong and perhaps other jurisdictions are easing regulatory policies in the region? Kaiko analyst Conor Ryder suggests that given the SEC’s “carpet bomb” the time has come for Hong Kong to strike.

Monthly trading volume since. 2020 Source: Kaiko

The influx of new capital to Hong Kong and Asia could mean economic growth for the region and Asian trade. Data compiled by Kaiko shows that Asian stock exchanges benefited the most from the 2021 bull run. Yet, since China banned digital assets at the end of 2021, Asia has fallen considerably behind the rest. regions regarding Binance trading volumes.

According to the SFC’s proposal, they will allow the trading of “top virtual assets” included in at least two approved indices.

Eligible crypto assets that meet the SFC criteria. Source: tier10k on Twitter

Perpetual futures markets reacted positively to the realization that listed tokens could see renewed flows from Asia, with open interest in Bitcoin Cash, Litecoin and Polkadot increasing by 15% in the past week, according to Kaiko Research. . Funding rates also evolved positively and have generally held steady since the announcement.

Perpetual futures open interest and funding rates. Source: Kaiko

The announcement of a new regulatory approach from Hong Kong, with alleged support from China, could be seen as positive for crypto in the long run. In the meantime, the market is still deciding which direction prices will take, for a continuation of the crypto winter or a new bull market. Conor Ryder concluded:

The timing of the announcement, as the SEC cracks down on crypto, seems intentional and could actually drive crypto business out of the US and into Asia over time.

The total market capitalization has decreased, as shown on the daily chart. Source: TOTAL Trading View.

The total market capitalization at the time of this writing is $1.02 trillion, which represents a decline of -3.13% in the last 24 hours. The market capitalization of Bitcoin is $449 billion, with a dominance of 40.33%.

The market capitalization of Stablecoin is $137 billion and represents 12.29% of the total market capitalization, according to data from CoinGecko.

Featured image from Unsplash, chart from TradingView.

[ad_2]