China could become a major driver of the next cryptocurrency market cycle if it finds a way to reopen access to digital assets, according to Solana CEO Joseph Chee. He suggests Beijing is using Hong Kong as a testing ground for crypto regulations before any potential policy shift on the mainland.
Hong Kong as Regulatory Laboratory
Chee said in a recent interview that China cannot afford to ignore blockchain technology despite its restrictions on cryptocurrency trading. "They are using Hong Kong as the region to test how the technology will be implemented and are going to find ways to manage it," he stated.
Hong Kong has been approving regulated spot ETFs, tightening audit rules for virtual asset service providers, and developing stablecoins including HSBC's RedCoin. This regulatory framework may allow mainland China to study how crypto markets operate under stricter oversight before deciding whether to expand domestic access.
China's Existing Crypto Holdings and Mining
Despite banning cryptocurrency trading in 2021, China maintains significant exposure to digital assets. The country holds an estimated 190,000 Bitcoin in government-linked wallets, valued at approximately $15.7 billion, making it one of the world's largest government-linked Bitcoin holders.
China also remains a major player in Bitcoin mining. Estimates suggest China-linked miners control between 14% to 20% of global Bitcoin mining power.
Chee believes that if China were to allow more cryptocurrency trading and blockchain use, the impact on global markets could be substantial, noting that Asia's large population and early adoption of crypto technology could fuel significant growth if restrictions were eased.
Blockchain Development Beyond Trading
Beyond cryptocurrency markets, China is developing blockchain infrastructure for broader applications. A 19-measure policy aims to build nationwide blockchain and computing infrastructure focused on manufacturing, banking, and data sharing, while improving data ownership rules and cross-border data flows.
This suggests Beijing is continuing to explore blockchain technology even as access to cryptocurrencies remains restricted.
