China has reason to be wary of crypto. It doesn’t want people to use it to evade its capital controls, for example. At the same time, China has long embraced the potential of blockchain technology, and Beijing even issued a Web3 white paper. The country has ambitious plans for its central bank digital currency. It is possible that authorities want to keep the door slightly open to crypto itself, just in case.

That theory would help explain what’s happening in Hong Kong. The city has made very public steps to establish itself as a digital asset hub of Asia, if not the world. Hong Kong and China operate as “one country, two systems,” and Hong Kong’s relatively welcoming stance toward crypto has at least some degree of approval from Beijing. Letting crypto thrive in Hong Kong, if not the mainland, is a way for China to stay in the game while mitigating the risks.

In China, you need to look not just at what the rules say, but at how people interpret them. Referring to China’s policy as a blanket crypto ban oversimplifies the situation in one of the most important markets in the world.

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