Chinese Investors May Turn To Cryptocurrency Against Possible Government Pressure

Millionaire Chinese investors, who hold their wealth, in overseas accounts and affairs, have been targeted a tightening of policies since early 2018. These investors are the ones who are dependant on Honk Kong real estate markets, Swiss offshore banks and foreign stock markets to hoard their properties, huge sums of money and other such assets outside China. This repression on them by local financial authorities, however, may lead the local investors to alternative ways of investment, like Cryptocurrency.

Recently, the Chinese government has started to collaborate with agencies, in the 83 countries, that adhere to the Common Reporting Standards, as set by the Organization for Economic Cooperation and Development. This will facilitate a direct communication with some regions like the Virgin Islands, Bermuda, Luxembourg, Switzerland and the Bahamas that investors turn to, to save mammoth amounts of money in offshore accounts. It has been agreed that these 83 countries will share data about the accounts held by the Chinese citizens to their government, which would allow them to target high profile millionaire investors.

The most commonly used market by the Chinese investors is the real estate market of Hong Kong, as it is extremely easy for them to set a shell company there, and thus receive a bank account the name of the firm. This enables them to easily move funds from China to Hong Kong, which is then used to invest in properties in the region. This, however, makes it extremely difficult for local residents to acquire properties as this influx of Chinese investors, increase the premiums on apartments.

Though it might be difficult to track down and then prevent the money flowing in from China into the real estate market of Hong Kong, it is quite easy to crack down on individual investors who hold massive amounts of cash and assets in offshore accounts. In light of such a possibility, Investors in China may turn to cryptocurrency, whose lack of correlation with the broader financial market could provide a safe haven against the global economy.

Terence Tsang, a Hong Kong and Taiwan based digital asset executive said the over-the-counter crypto market of China remains highly active, after this imposition by the government. He further said,

“The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company.”