HK's digital hub goals woo global investors

Private banking managers see huge benefits from relaxed cryptocurrency rules in East Asia's fastest-growing crypto market. Zhang Tianyuan reports from Hong Kong.

Anew breed of cryptocurrency millionaires, helped by the Hong Kong Special Administrative Region government's agile adoption of cryptocurrency regulations, is attracting overseas private banking managers to the global financial hub despite ongoing geopolitical tensions, according to Brian Ah-Chuen, a seasoned Mauritius-based banking director.

Ah-Chuen, managing director of ABC Banking Corp, which provides global commercial banking services, plans to expand the company's private banking services in the SAR, targeting high-net-worth individuals with assets exceeding $1 million.

The bank aims to transform its Hong Kong representative office by deploying wealth management professionals. The move follows Hong Kong's groundbreaking decision to accept cryptocurrencies as proof of wealth for immigration applications under the New Capital Investment Entrant Scheme.

"The potential inflow of new wealth has been a boon to the asset management sector, which has seen astonishing growth in recent years," said Ah-Chuen.

A report by KPMG and The Private Wealth Management Association shows a turning point in 2023, with assets under management in Hong Kong reaching HK$9,022 billion ($1161 billion) — an almost threefold rise over the previous year.

Hong Kong's revamped Capital Investment Entrant Scheme (CIES) now accepts Bitcoin and Ether as legitimate proof of the required HK$30-million net worth for investment visas, according to the city's investment promotion department, InvestHK.

The surge in crypto millionaires has posed fresh challenges for risk-averse banks, which typically avoid direct exposure to digital assets. To bridge the gap, financial institutions are forming partnerships with licensed crypto custodians and auditors to verify digital wealth holdings. ABC Banking has teamed up with fintech provider Payment Asia Group to create a verification process for asset holdings.

The emerging trend aligns with Hong Kong's broader ambitions to become a global digital asset hub. The Securities and Futures Commission (SFC) in February unveiled a crypto blueprint outlining the regulatory priorities for new regulations on virtual asset custodians. It expanded over-the-counter services, strengthened trading platform requirements, and implemented initiatives to combat illicit activities, while boosting investor education.

The SFC is also developing a framework to enable professional investors to trade virtual asset derivatives and access new token listings.

According to Chainalysis' Global Crypto Adoption Index, Hong Kong has emerged as East Asia's fastest-growing crypto market, recording an 85.6 percent year-over-year growth and securing the 30th global spot.

Gateway to growth

Ah-Chuen said Hong Kong remains a safe haven for investment despite setbacks like the COVID-19 pandemic and United States trade sanctions.

"When you fall, you must find new paths to growth," he said. "I've seen InvestHK's aggressive promotion of various programs, particularly in family offices and investment frameworks. These initiatives have drawn talent and capital from around the world."

The city's initiatives to attract investment are showing signs of success. Official data show that since its relaunch in March 2024, the CIES has received more than 880 applications as of February.

The Office for Attracting Strategic Enterprises, which began operations in late 2022, has attracted 66 enterprises to Hong Kong by February, covering sectors such as life and health technology, artificial intelligence and data science, financial technology, advanced manufacturing, and new energy technology.

"Hong Kong's track record as an international financial center remains unmatched," said Ah-Chuen. "With global wealth continuing to grow, the city is drawing on its deep experience in international markets."

He pointed to Hong Kong's sophisticated banking infrastructure and diverse investment services as key advantages. "The presence of major international banks, combined with the city's efficient operations and comprehensive offerings for family offices, creates compelling opportunities for our banking products' global diversification," he said.

The banker highlighted Hong Kong's strategic position as a gateway to the Chinese mainland. "The mainland's economic influence is undeniable, and Hong Kong's connection to this powerhouse makes it an essential player in global business," he added.

The relationship between China and Mauritius adds another layer to ABC Banking's expansion strategy. Their diplomatic ties, dating back to the 1970s, were strengthened by a landmark free trade agreement which entered into force in January 2021 — China's first with an African nation.

Mauritius, an island nation of 1.26 million people off Africa's southeast coast, has evolved into a diversified economy to which financial services contribute 40 percent of gross domestic product, along with tourism, manufacturing, fisheries and information technology.

Trade between the two countries has steadily strengthened in recent years, with Mauritius importing $993 million in goods from China in 2023 while exporting goods worth $26.3 million to the country in that time.

Ah-Chuen sees enormous opportunities for future cooperation in their bilateral relations. "We are building on decades of goodwill and trust to strengthen our presence in both the HKSAR and on the mainland," he said.