Since Bitcoin (BTC) was birthed, it has been viewed as an asset that is not controlled and confined by central banks and the limitations of traditional economies. Moreover, Bitcoin is seen as a perfect store of value, in that it is easy to transfer, is cheap to transact, is hard to be manipulated by centralized entities, and leaves virtually zero physical footprint. With Hong Kong, a democratic Chinese special administrative region, falling victim to political and economic turmoil, this value proposition is likely currently being tested.
Hong Protests Continue Into Second Week
Over recent weeks, Hong Kong has been a hotbed of political controversy. Carrie Lam, the so-called “chief executive” of the island city, brought forward a bill that, if implemented, would allow for those deemed criminals to be seized and then extradited to Taiwan, Macau, and mainland China. This was purportedly done in response to a criminal case, in which a Taiwanese man murdered his girlfriend, fled to Hong Kong, and was caught by authorities.
While this legislature has an innocent premise, as there are so-called “loopholes” in the law, many in Hong Kong aren’t too sure that this amendment to the city’s extradition treaties is what is seems to be. Those against this bill claim that if the new rule is put in place, Chinese authorities will be able to silence any political dissident, outspoken journalist, or “corrupt” businessman/woman as they please, without any regard for the judicial process or human rights.
As a result, many have taken to the streets to express their distaste. Last weekend, we saw a purported one million locals, clad in white and holding anti-Lam signs, turn Hong Kong’s financial district into an impasse for cars. In the middle of the week, tens of thousands, maybe even over one hundred thousand, turn their back on work, striking and protesting to get Lam to pull the bill.
This event turned violent, with police calling in riot police, who utilized water cannons, bean bag rounds, and rubber bullets, to force the demonstrators out of the vicinity of a government building. Yet, all of this didn’t work, with Lam refusing to back down.
And as a result, another protest took place on Sunday. This time, a claimed two million — around 30% of Hong Kong’s total population — took the streets, even though Lam paused the processing of the bill “indefinitely” and apologized profusely in a public statement. In other words, Hong Kong’s political climate is still on thin ice.
Capital Flees The Region
Amid all this, reports have divulged that money is fleeing the city for other havens in Asia and across the globe. Per an exclusive from Reuters, “some Hong Kong tycoons” have begun to send their personal wealth offshore. The outlet cites financial advisors, bankers, and lawyers familiar with such transactions. One advisor states:
“It’s started. We’re hearing others are doing it, too, but no-one is going to go on parade that they are leaving… The fear is that the bar is coming right down on Beijing’s ability to get your assets in Hong Kong. Singapore is the favoured destination.”
One man, who remains anonymous for obvious reasons, has started to move more than $100 million via Citibank to Singapore. Others have been making similar moves, finding ways to siphon money out of Hong Kong to other locations deemed prime.
Right now, it seems that the money that can be seen is flowing through traditional mediums, but some are sure that if this tumult continues, Bitcoin will start to see some inflows, especially from wealthy Chinese investors that want out of their local economy. You see, through OTC desks, investors can buy millions worth of BTC and be safe from any capital controls within a few hours, maybe even faster.
Protestors Avoid Fintech
This revelation is the latest in how the ongoing imbroglio in Hong Kong may tie into cryptocurrency, and may actually be a boon for this industry. As reported at Blockonomi previously, during last week’s unregistered rallies, those attending decided to ditch the use of their fintech accessories and cards, namely the Octopus Card, which allows for metro travel and the purchase of food items at selected locations.
Instead of using Octopus, they queued up to buy paper tickets, which are uncommon in the city. They feared that police would scour through the logs to pinpoint individuals involved in the protests, which turned violent at some points, and then crack down further.
Bitcoin and other cryptocurrencies, of course, would be a solid answer to these fears if implemented correctly.