With help from Derek Robertson
In the battle to dominate the future of money and finance, China has multiple ways to win.
As the United States – the world’s largest financial power – continues to consider its approach to crypto regulation with the House Financial Services Committee expected to consider a bill next month, financial centers in London, Dubai and Singapore, among others, have tried to set themselves up. as alternative crypto hubs.
But thanks to Hong Kong, China is simultaneously taking two approaches to crypto.
On the mainland, Beijing has banned global crypto networks while developing and promoting more versions of next-generation monetary technology that gives greater control to the Chinese Communist Party government.
But through its special administrative region in Hong Kong, Beijing has also carved out a niche in the free-floating global markets for digital assets that could compete with other free-market financial hubs. Despite being denominated in dollars, the world’s most popular stablecoin, Tether, is owned by a Hong Kong-based company.
Heading into summer, crypto action in the region is heating up.
Earlier this month, the Bank of China, a majority state-owned company headquartered in Beijing, issued $28 million in Ethereum debt through its Hong Kong-based investment arm. This move allows the government to take advantage of open blockchain networks for its own purposes without relinquishing its control over the financial activities of the average citizen.
Also this month is the reported the financial newspaper that regulators in Hong Kong are pressuring major banks in the region to provide banking services to crypto exchanges – reversing a dynamic in the US where many banks are reluctant to take on crypto clients due to the uncertain legal status of the industry .
And this morning, Hong Kong-based independent journalist Colin Wu reported that the region’s largest bank, HSBC, has begun offering clients access to Bitcoin and Ethereum ETFs. Bank representatives did not immediately respond to requests for comment.
In effect, the existence of Hong Kong allows the Chinese Communist Party to exert internal financial controls on the mainland while hindering capital flight to bet on the potential of global crypto networks to disrupt money and finance.
Within China, Beijing will be able to run the world’s largest population and second-largest economy on financial networks it designs and controls (and induce trading partners to join them) – without compromising its ambitions. to make China a player in the more unruly crypto networks used elsewhere.
“They still see the value in this thing. You just can’t do it in a country where capital is tightly controlled,” said Sean Lee, the Hong Kong-based founder of crypto startup Odsy, and an advisor to the Crypto Council for Innovation, a trade group – which has played a role in China’s approach. of crypto as a natural extension of its existing role as an international financial center. “They always need a place for capital to come in and go out.”
Belgium’s digital chief calls for the European Union to bolster his technical knowledge about the algorithms that power apps like TikTok.
Speak against POLITICO Europe’s Morning Tech NewsletterMathieu Michel, the country’s deputy digitization minister, called for a “European Agency for Algorithms” to give the bloc a more solid way to analyze those kinds of algorithms before making laws.
“We need to understand how an algorithm works before we can determine whether certain things are acceptable or not,” said Michel. “Having a structure that allows it [us] to come to an objective analysis of the algorithms, that is something that is important.”
Michel’s home country will assume the presidency of the European Council, the body that sets the political and regulatory priorities of the EU, after Spain, which hopes for itself establish itself as a leader in the field of AI within the union after the departure of the UK. — Dirk Robertson
The ever-expanding web of regulatory approaches to AI the world is almost begging for a simpler means of classification.
In a recent blog post, researcher Brent Skorup offered such an alternative, comparing “unbundled” regulatory regimes to “bundled” regimes. The unbundled approach, in the very simple words of Biden White House adviser Tim Wu:
“Don’t: Create an AI-focused federal agency
Do: keep the laws on the books.”
Simple enough…in theory. Skorup, a free market practitioner at George Mason University’s Mercatus Center, said that when existing laws or agencies are applied to a technology that preceded them, there will inevitably be clashes over how to proceed between figures like him and those who do. do not. his philosophy, like Wu or the anti-monopoly FTC chairman Lina Khan.
But he argues that those disputes are preferable to overly prescriptive AI laws such as those soon to be introduced in the EU. “U.S. legislators and regulators have a choice: create new, vague ‘AI laws’ or apply existing laws – such as antitrust, copyright, Sec. 230, product liability and constitutional law — to new technologies,” writes Skorup. “U.S. policymakers and U.S. businesses seem to be leaning toward the latter approach, which bodes well for AI investment and legal clarity. But there is a growing refrain for the EU-style horizontal approach.” — Dirk Robertson
Stay in touch with the whole team: Ben Schrekinger ([email protected]); Dirk Robertson ([email protected]); Mohar Chatterjee ([email protected]); And Steve Heuser ([email protected]). follow us @DigitalFuture on Twitter.
If you have forwarded this newsletter, you can to register and read our mission statement on the links provided.