China vs Hong Kong: Crouching Tiger, Hidden Dragon

China and Hong Kong are two leaders of the world financial market and two irreconcilable antagonists. Despite the fact that Hong Kong became an integral part of China in 1997 it remembers of it's British past and strive to remain a stronghold of atlantic values in the China Continent. "All under Heaven" is keen to become the first at everything and expand its influence all over the world. The scope of crypto technologies is one of the grounds of this confrontation.

Not so long ago The Hong Kong Monetary Authority (the equivalent of the central bank) launched it's owntrading blockchain framework. It combined 21 banks operating inside of a special administrative centre and must significantly reduce bureaucratic burden and time cost for carrying out transactions. After the project starts a transaction will take 24 hours, although previously banking processes required up to 14 days. In the development of the framework participated fintech company OneConnect — daughter company of PingAn, the biggest chinese insurer ranging $704 billion.

For its part, continental China develops it's own blockchain. Back in may 2017 the central bank of PRC created a special fintech committee. It conducts research in the field of distributed registries, cryptocurrencies and studying it's influence on the economy and financial stability of the country. The same year the government announced plans to relocate the Social Insurance Fund ($230 billion) on a blockchain framework. UBS in China (Swiss bank's structural unit) became a partner of the state in this project.

If we rise above the problem, we will see only yin and yang of chinese reality. The Hong Kong project is financed by a chinese investor and chinese enterprise is supported by the Swiss bank. The total merger of East and West. But this is only a interim conclusion.

The game is that blockchain of the Hong Kong regulator comes from Britain: this system was developed and tested by the english HSBC bank. "Big China" rather wants to develop it's own technologies and invests considerable resources in it.

The attitude of Hong Kong and China towards the development of crypto market is totally different. In the Kowloon Peninsula cryptocurrency is almost legalized and equated with stocks and shares. China sees in it a threat to ot's national interests. Of course, it doesn't preclude China to invest in development of crypto market all over the world while receiving political and economical dividends. But the problem of uncontrollable capability of cryptocurrency on it's territory China fixed drastically - it just simply banned exchange trading of cryptocurrency throughout the country. By the way, Binance, one of the largest crypto exchanges in the world is from China. It's a persistent opposition between freedom and and control, West and East values.

Sooner or later the cognitive dissonance of chinese politics could drag the country to some grave ecomomical consequences - while Hong Kong will evolve attracting investment from China. We will monitor the economical situation.