China’s encryption liquidation plans reveal its major strategy star-news.press/wp

Opinion: Joshua Zhou, co -chair of the Hong Kong Web 3 Association

Last week advertisement Hong Kong 2.0 digital assets policy statement has been released with a lot of anticipation and uproar. The Hong Kong government has promised a comprehensive organizational framework that would unify the license and “expand the set of distinctive products”.

However, under the noise and visual maneuver lies a more subordinate step: Beijing (the second largest encryption carrier) advertisement is its intention to liquidate the virtual currencies confiscated through licensed exchanges in Hong Kong. These events, although they are apparently separate, are actually components of carefully coordinating strategy by China, designed for Hong Kong mode as the center of virtual assets dominant and a strategic market operator in China.

Strategy for rapprochement: Hong Kong is preparing to become the center of virtual assets in the region. However, it will also serve as global ambitions in China: hedge encryption, market price method, and a front leadership position for Mrs. PRC-Crypto.

Organizational foundations

On the surface, Hong Kong’s jump policy appears to be all the main headlines. The right understanding of the strategy, however, requires looking at the surface. The real power of these policy decisions is to inject liquidity that the decision to repetition in China will always create. This tool will simultaneously give unprecedented influence over the global virtual asset markets.

The basis of the Hong Kong regulatory framework can be returned to 2022 with the approval of amending the money laundering law and its anti-terrorism decree (AMLO), which, after the Securities and bullets committee provides the opportunity to gain sufficient experience within the framework of the former OPT-in system, was brought in separation of the imams circulating. This decisive step is guaranteed with the criteria of the Financial Labor Squad (FATF) and has become the first cornerstone legislation of virtual assets.

The following decisive legislation that happened was the Stablecoin Law, which will start on August 1, 2025, establishing a license system for Stablecoin’s references. Hong Kong’s monetary authority oversees this system, assigning individual reserves, strong redemption mechanisms and strict risk controls.

In June 2025, he entered the LEAP 2.0 digital asset policy statement developed the Hong Kong framework. Leap unifies the license, expands the set of distinctive products, progresses in the use of cases of cooperation across the sector and talent development. The jump, which goes beyond the organizational absurdity directed at the FATF, goes beyond that the architecture that will “expand the Hong Kong range to new prospects for the leadership of global digital assets” and a reference to Hong Kong’s willingness to embrace the future of digital assets.

However, the laws and regulations alone cannot driving markets. It is the liquidity that is decided today.

China’s decision to direct digital asset sources through the licensed value -added tax to Hong Kong will lead to real concrete and tangible liquidity into the ecosystem. This is no longer an exercise of the FATF compliance list – it is a strategic lever. By enabling the censorship liquidation, Hong Kong will become a market price vehicle capable of adjusting the supply and fast demand, which is another major standard factor for the value of virtual assets.

Liquidity as a weapon

Liquidity is the lifestyle of any market. Without liquidity, even the most advanced market will stumble. Just look at the London Stock Exchange.

Related to: What countries have the most Bitcoin – behind the United States and China

Under China’s major strategy, unlike the United States, which carries a wide strategic strategic reserve and is placed under a rigid “suspension” policy only, the liquidity that was injected into Hong Kong exchange will actively transform into the market liquidity. This preparation will give Hong Kong – and thus China – the ability to influence prices, install markets and respond to geopolitical pressures as it sees it appropriate.

Just as the control of rare ground minerals gave China all the cards in the latest trade negotiation rounds with the United States, as well as will also control encryption liquidity and effectively control the value of the United States’s encryption reserve recently.

This is the precise and deep shift, in the balance of strength. The ability of one nation is to control liquidity flows to control market novels and results.

The consequences and anti -measures

This major strategy mainly changes the balance of strength within the crepevosfire. Hong Kong will have a decisive advantage in absorbing institutional capital and deepening the liquidity of the market, and benefits from its unique position as a channel for the PRC encryption movements.

Meanwhile, by expanding the “Hong Kong to the new prospects for the leadership of global digital assets”, China will have a strong geopolitical tool in its hands, capable of controlling global cryptocurrency assessments by managing the calculated market liquidity.

Meanwhile, the United States will face a strategic dilemma: Should it continue with a negative encryption stock with a limited or non -existent market effect? Or should the United States consider new mechanisms to balance the growing control of Hong Kong on encryption liquidity?

The dynamic understanding of this reaction is an important matter for market participants, lawyers, risk practitioners and legislators. After all, compliance frameworks should be modified to address the audit increased and risk associated with liquidity -based market movements. On the other hand, risk management strategies that expect fluctuations caused by strategic liquidity flows and a severe understanding of how liquidity control market liquidity and the main results.

Thus, the key of the web3 market is liquidity and information. While the Hong Kong jump policy is receiving the media’s attention, the real chess step lies in the policy of liquidating encryption and injection in China. This injection will turn Hong Kong into a price vehicle in the dynamic market, capable of using liquidity as a weapon with which some judicial states can match.

Compare this with the United States, which is bound by the “solid” reserve policy, and lacks flexibility to influence the market liquidity or respond effectively to price fluctuations.

Singapore, which, despite the mature regulatory framework, faces restrictions in the market, and Dubai, despite its ambition, struggles with fragmented organizational receptions and high operational costs that hinder rapid scaling. Hong Kong “holds all cards”. Only this time, China also makes all liquidity cards.

As such, the unique mixture of the city is from the mature regulatory framework, direct access to the second largest coding possession in the world and the ability to spread this liquidity strategically gives it an estimate, gives it high -ground unparalleled ground in the Web3 ecosystem. Hong Kong can adjust global encryption prices in actual time, attract institutional capital and inconvenience in a stable and friendly environment for the investor.

Liquidity is the final leverage in this competition, and Hong Kong holds the key. Understanding this strategy with layers is essential for those who seek to move in the landscape of advanced digital origins clearly and eloquence. Those who fail will find themselves outside.

Opinion: Joshua Chu, co -chair of the Hong Kong Web 3.

This article is intended for general information purposes and does not aim to be and should not be considered legal or investment advice. The opinions, ideas and opinions expressed here are alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.