Sun is one of the crypto industry’s biggest bulls and has long advocated for China to ease its tight crypto restrictions. He has been one of the most vocal advocates of Hong Kong’s embrace of cryptocurrency as well.
In late June, Sun won a defamation court lawsuit in China against the Chongqing Business Media Group. The court stated in its verdict that claims of Sun’s involvement in insider trading, fraud, and money laundering were “entirely unsubstantiated.” The Chongqing Business Media Group subsequently removed all of its false content and issued a formal statement of apology to Sun.
The key issue we see here is that the Chongqing Media Group accused Sun of wrongdoing without evidence. It is thus not surprising that he won his defamation lawsuit.
Yet that victory does not say anything about China’s broader attitude towards cryptocurrency. Sun has tried to suggest otherwise in his conversations with crypto media publications. He told The Block, “Of course, some regulators are very conservative about cryptocurrency or cryptocurrency policies, but overall the court, the government doesn’t have a discriminatory policy [to crypto] at all.”
It is unclear how one could come to that conclusion. China initiated a harsh crackdown on cryptocurrency in 2017 because it the Chinese authorities believed it offered no real benefits to the Chinese financial system while elevating risk. Chinese citizens at the time were using crypto to evade capital controls that Beijing sees as essential to preventing large-scale capital flight. Since then, Beijing has not once eased its crypto restrictions – it has only gradually tightened them.
Permitting Hong Kong to experiment with crypto does not signify impending liberalization on the mainland. After all, Hong Kong operates under the one country, two systems governance model that allows it to maintain an open financial system different from the mainland’s.
While we expect that Hong Kong will redouble its efforts to become a crypto hub – largely out of necessity as it has lost ground to Singapore in many other respects in recent years – the mainland is very unlikely to follow suit. At its essence, cryptocurrency is something that supports decentralization and anonymity – two things that the Chinese government does not want to promote in its financial system.