U.S Senate Sanctions Following the Hong Kong Security Law Could Affect Crypto Brokerages

While the new security law doesn't intend to change Hong Kong's financial status, this could quickly change, according to Weese. And the United States' turn away from its previous bill could have, as yet unknown impacts.

The U.S Senate sanctions that were passed in response to the Hong Kong security law might affect crypto brokerage operations.

Dubbed the ‘Hong Kong Autonomy Act,' this senate bill aims to reprimand China for eroding the city's autonomy, which had long favored its position as a financial hub. According to the new security law, Hong Kong's freedom of expression has been infringed to the extent of not being allowed to criticize the Chinese Communist Party (CCP).

With the U.S acting as the leader of the free world, a counter move on this infringement was to be expected. Now that the Senate has already given the green light; the U.S government can now move to limit its foreign registered subsidiaries in Hong Kong from providing access to the dollar ecosystem. These limitations will be in situations where the other party is undermining Hong Kong's autonomy. However, the bill did not specify what criteria would be used to arrive at such decisions, leaving this to the U.S Treasury.

The Effect on Crypto Brokerages

These moves by the U.S senate and CCP could have a significant toll on crypto brokerages operating in Hong Kong. The city has long been a link between mainland China crypto businesses and international markets, given its friendly nature towards digital assets. This link has since motivated mainland China-based crypto exchanges such as Huobi and OKCoin to set up in Hong Kong.

While their operations are majorly in Asia, access to the dollar ecosystem is fundamental for liquidity and other aspects. According to the president of Hong Kong's Bitcoin Association, Leo Weese, a move to curtail liquidity provision would be catastrophic for the Hong Kong-based exchanges:

“The most successful cryptocurrency companies here are dependent on their access to the U.S. dollar system … They move money around, they are big brokers, and if they somewhat lose that access, they are in trouble.”

Weese's sentiments were seconded by other stakeholders in this market, including Genesis Block's chief trader, Charles Yang, who noted that reliance on U.S banks for dollar settlements is inevitable. Consequently, the ongoing friction puts their business at more risk.

“If there is any further friction from the U.S. policy, it could be very damaging to our business.”

Hong Kong's Financial Dominance in Limbo

While the new security law doesn't intend to change Hong Kong's financial status, this could quickly change, according to Weese.

“I think for now there is no intention to mess with Hong Kong's financial system and scare companies away, but of course things could quickly change.”

As both the CCP and U.S continue to fine-tune their stance on this development, a move to Beijing as China's financial hub will mean more scrutiny by the government. This might, in turn, make wire transfers and other financial services expensive and slower compared to the autonomy that preceded business in Hong Kong.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Edwin Munyui
Edwin Munyui
Edwin is a FinTech enthusiast with a particular interest in blockchain technology and cryptocurrencies. He has worked as an author in the blockchain space since 2017 and enjoys creating content that both crypto veterans and newbies can understand. His simple writing style and financial market knowledge have made him a reputable fundamental and technical analyst with the ability to handle any topic around blockchain and crypto over the years.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,485FansLike
2,795FollowersFollow
4,262FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

VeChain Joins China Animal Health and Food Safety Alliance (CAFA)

VeChain has joined the China Animal Health and Food Safety Alliance (CAFA) as one of its council members and will be providing them technical...

Coinbase Pro to Pass the Rising Network Fees Onto The Customer During Withdrawals

The launch of UNI, the governance token of Uniswap DEX, is having a big impact on the Ethereum network. The good thing is the price...

Homeland Security Calls On Freelancers to Design A Digital Wallet Interface; $25k to Finalists

The Science and Technology Directorate (S&T) division of the US Department of Homeland Security has allocated up to $25,000 in prizes as an...

BoE Explores Negative Rates; Bitcoin Is A ‘Must' Because Fiat is a ‘Giant Ponzi Scheme'

The Bank of England (BoE) is exploring negative interest rates now and in response Sterling weakened sharply. The pound dropped 0.7% against the dollar after...

Nexus Mutual Sees Active Cover Growing 10x, Now Token Price ‘Directly Linked to Adoption'

“DeFi is developing faster than you can say ‘protect me from the risks in DeFi’,” said Kayleigh Petrie, Director of Engagement at Nexus Mutual,...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today