The global cryptocurrency landscape could be in for a shake-up if the United States, under the Trump administration, adopts a pro-crypto stance. Xiao Feng, CEO of Hong Kong-based Web3 firm HashKey Group, suggested in a recent interview with the South China Morning Post that a supportive U.S. approach toward digital assets might compel China to reconsider its restrictive policies.
According to Feng, competition in the crypto space could take on a geopolitical dimension. If the United States clarifies its stance and takes active steps to promote cryptocurrencies, China may feel pressured to do the same to maintain a competitive edge. This could open the door for a regulated framework in China, possibly reviving interest in crypto investments, particularly in areas like stablecoins. Given the rapid pace of development in the Web3 and digital asset sectors, any shift in attitude from such major economies would have far-reaching implications.
China’s relationship with cryptocurrencies has been complex and frequently hard-line. In 2017, the Chinese government banned initial coin offerings (ICOs), and in 2021, it went further, clamping down on crypto trading and mining activities. The country has since focused its efforts on promoting its central bank digital currency (CBDC), the digital yuan, while keeping cryptocurrencies largely at bay. Despite this, Hong Kong has been carving out a different path, emerging as a more crypto-friendly region. Yet, as Feng pointed out, the expected level of support from mainland China for Hong Kong’s crypto initiatives hasn’t materialised.
Feng believes that China has the potential to make significant gains if it reopens its crypto market in a controlled and regulated manner. The competition with the United States could be a driving factor, especially if the U.S. adopts clear and favourable crypto policies. A well-regulated environment might even become attractive for international crypto investors, many of whom look for stable regulatory frameworks. During bear markets, investors often seize the opportunity to buy assets at lower prices, and increased competition between China and the U.S. could benefit these market participants.
Donald Trump, who has entered the race for the 2024 U.S. presidential election, has already made some surprising statements regarding his stance on cryptocurrencies. Previously known for his scepticism—he once called Bitcoin a “scam”—Trump’s campaign now promises to foster the development of the crypto asset sector. He has indicated plans to remove SEC Chairman Gary Gensler, a figure known for his strict approach to regulating cryptocurrencies, and to dismantle policies perceived as crypto-unfriendly.
This shift in Trump’s position on digital assets marks a significant departure from his earlier views. He has mentioned safeguarding and even promoting the use of cryptocurrencies, aiming to create a more welcoming atmosphere for innovation and investment. There’s also speculation about the U.S. potentially halting the sale of its Bitcoin reserves and holding them as a strategic asset. Such a move would mark a bold step in treating digital assets as part of national economic policy.
Xiao Feng has stressed that consistent and clear legislation in the U.S. could serve as a catalyst for China to soften its stance. Regulatory certainty, according to Feng, would pave the way for crypto to be embraced more broadly across major global markets. If both nations begin to seriously engage with cryptocurrency as an asset class, the sector could experience significant transformations.
HashKey Group, valued at over $1.2 billion as of early 2024, is deeply invested in Web3 infrastructure and the broader crypto ecosystem. The company has been watching these geopolitical shifts closely, as regulatory environments play a crucial role in shaping market opportunities and risks. Feng’s perspective offers a glimpse into how intertwined global crypto markets could become, depending on the regulatory strategies of the world’s largest economies.
Despite the scepticism Trump has expressed in the past, his campaign’s renewed interest in digital assets seems to be tapping into the broader trend of growing blockchain adoption. If the U.S. government decides to fully embrace crypto innovation, China may find itself at a crossroads, needing to decide whether to follow suit or risk being left behind in a rapidly evolving digital financial world.
For the cryptocurrency community, these developments could offer a mix of challenges and opportunities. A supportive Trump administration would likely see the industry thrive within the U.S., but the real game-changer would be if China, a country known for its tech prowess and vast market, decides to re-enter the arena. As it stands, China’s hesitation has been partly influenced by concerns over financial stability, fraud, and the potential for cryptocurrencies to undermine state authority. However, strategic competition with the U.S. could act as a tipping point, prompting a reconsideration of these concerns.
Investors and industry experts will be closely monitoring how this geopolitical chess game unfolds. The hope is that more countries will see the economic potential of well-regulated digital asset markets. A global race to lead in crypto innovation could be precisely what the sector needs to move forward, overcoming the regulatory hurdles that have plagued it in recent years.
Feng’s remarks highlight a potential ripple effect: if the U.S. and China vie for dominance in crypto, it may accelerate the maturity of digital asset markets. For now, though, it remains a matter of political will and strategic interests. With both nations capable of shaping the future of financial technology, the coming years could redefine the role of cryptocurrency on the global stage.
