China’s crypto liquidation plans reveal its grand strategy

Key Points

1. Hong Kong's LEAP Digital Assets Policy Statement 2.0 expands tokenized products and aligns with FATF regulations, establishing a licensing regime for virtual asset trading platforms (VATPs) and stablecoin issuers.

2. China's strategy involves using Hong Kong as a conduit for crypto liquidation, converting seized assets into market liquidity to influence global cryptocurrency valuations.

3. Hong Kong's regulatory framework, including the AMLO mandatory licensing regime, ensures compliance with international standards and enhances its role as a virtual asset hub.

4. Liquidity is emphasized as a critical factor in market dominance, with Hong Kong's exchanges strategically injecting liquidity to stabilize and control crypto valuations.

5. The U.S. faces a strategic dilemma regarding its passive crypto stockpile, while Hong Kong's dynamic market policies position it as a leader in the Web3 ecosystem.