Joseph Chee, the former head of Asia investment banking at UBS, says China could spark the next Bitcoin supercycle if it lets citizens trade crypto under tight state controls. Chee, who now chairs Nasdaq-listed Solana Company, made the argument as Hong Kong pushes ahead with a licensing regime for crypto dealers, custodians, advisers and fund managers.
He's not describing a policy shift. Mainland crypto trading is still illegal, and Beijing has announced no plan to extend Hong Kong's licensing rules across the border.
The Hong Kong test lab
Chee's read is that Beijing is using Hong Kong to figure out how crypto can be rolled out and controlled before it ever touches the mainland. He says officials are monitoring the technology through think tanks and academics — a quiet watching brief rather than a legislative sprint.
There's a lot to watch. Hong Kong licensed its first two bank-backed stablecoin issuers in April, and the city's first stablecoin went live in August. Christopher Hui, Secretary for Financial Services and the Treasury, reiterated in a June reply to lawmakers that a bill to license crypto dealers, custodians, advisers and fund managers is coming this year.
That bill matters beyond Hong Kong's borders. It's the closest thing to a regulatory blueprint that mainland policymakers can study without formally touching crypto themselves.
Two things standing in the way
Chee names two hurdles to any mainland reopening. First, officials still need to understand the market well enough to regulate it. Second, capital flight — a real concern given China's capital controls, which are built to stop money from leaving the country on demand.
Neither hurdle is small. Crypto is a bearer asset. It moves across borders in seconds, and no licensing regime changes that. For a government that has spent years tightening the exits, that's an uncomfortable property to invite in.
The February restatement of the ban by the People's Bank of China and seven other agencies underlined how far Beijing is from a rethink. That notice didn't just repeat the prohibition on trading — it required prior government approval for stablecoins, putting any yuan-pegged token under direct state sign-off.
The banking backdrop
Why would Beijing even consider this? The rural banking system offers one clue. China reported 670 rural bank closures in its latest yearly count, with bad loans on the rise. A state-controlled crypto channel wouldn't fix that, but it gives policymakers another lever to think about as traditional lenders struggle.
Chee's argument is essentially that a tightly controlled crypto market — one where the state can see flows and tax them — beats an outright ban that pushes activity offshore anyway. That's a policy debate, not a policy decision.
What to watch
Hong Kong's licensing bill is the concrete item on the calendar. Hui has said it's due this year, and its scope — dealers, custodians, advisers, fund managers — would make the city one of the more tightly regulated crypto hubs in Asia.
Whether Beijing treats that as a pilot to copy or a firewall to maintain is the open question. Chee is betting on the former. The February ban restatement and the absence of any mainland extension signal suggest the answer isn't close.
