On January 22, 2025, the Peoples Bank of China, the Ministry of Commerce, the State Administration of Financial Supervision, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the Opinions on Piloting the International High Standards in the Financial Sector in the Conditional Pilot Free Trade Zone (Hong Kong) to Promote Institutional Opening (hereinafter referred to as the Opinions)
The Opinion proposes 20 policy measures in several areas, including allowing foreign financial institutions to provide the same type of financial services as Chinese financial institutions, supporting the legal cross-border purchase of certain types of overseas financial services, facilitating investment-related transfers in and out of foreign investors, and improving arrangements for cross-border flows of financial data.
These policy measures mark the arrival of a new wave of opening up in the financial industry. For participants in cross-border investment, blockchain and cryptocurrency industries, these changes also contain important connections and potential positive directions. This article will analyze them one by one.
1. Investors can invest in new financial services through the Cross-border Wealth Management Connect pilot program in the Guangdong-Hong Kong-Macao Greater Bay Area
What are new financial services? What are the investable products in the Guangdong-Hong Kong-Macao Greater Bay Area?
The new financial services mentioned in the Opinion refer to financial services that are not provided in China but have been provided and regulated in other countries or regions. The new financial services will be piloted in Shanghai, Guangdong, Tianjin, Fujian, Beijing Pilot Free Trade Zone and Hainan Free Trade Port, as well as in cooperation platforms where the CPC Central Committee and the State Council have made clear arrangements to undertake important tasks of opening up.
This regional pilot model allows us to expect to see unique pilot rules in each region in the future, which is worth looking forward to.
What is more noteworthy is that the Opinion specifically mentioned that the new financial services will also continue to optimize the Cross-border Wealth Management Connect pilot in the Guangdong-Hong Kong-Macao Greater Bay Area , support mainland residents in the Guangdong-Hong Kong-Macao Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macao financial institutions through Hong Kong and Macao financial institutions, and expand the scope of participating institutions and qualified investment products.
Why is the Guangdong-Hong Kong-Macao Greater Bay Area so special? That is because the regional financial product model of Cross-border Wealth Management Connect has provided mainland residents with innovative and convenient cross-border investment paths and a rich variety of product choices, and is the vanguard and bridgehead in Chinas cross-border investment field. Now the introduction of a comprehensive pilot relaxation of restrictions on the participation of foreign financial institutions, types of overseas financial products and foreign exchange transfers has further fueled its development.
Taking Hong Kongs typical SFC-licensed crypto asset management business as an example, these products could originally only be operated in Hong Kong. However, once the new pilot framework is launched, Hong Kongs virtual asset ETFs and other innovative financial products may be open to mainland investors through the cross-border wealth management connect in the future, further enriching the investment options for mainland residents.
Which institutions can participate in the product launch? How to apply for new financial services?
The Opinion allows foreign financial institutions to provide new financial services similar to those provided by Chinese financial institutions in pilot areas.
In accordance with the principle of internal and external consistency, financial management departments may make decisions within 120 days from the date of acceptance of applications submitted by overseas financial institutions, investors of overseas financial institutions, and cross-border financial service providers that are complete and comply with legal forms for providing financial services in pilot areas, and notify the applicants in a timely manner.
Crypto Salad Views:
Driven by the new policy, the blockchain sector is expected to usher in more compliant product innovations. Some overseas regions have already allowed the issuance, mining and trading of virtual currencies. These mature technologies and models can be introduced into the domestic market through pilot areas. For example, through the Cross-border Wealth Management Connect pilot, virtual asset-related products are expected to be included in the investment scope, providing investors with indirect investment opportunities. This compliant channel will inject new vitality into the development of the blockchain industry and push it from the gray area to the sunshine.
After the launch of these products, a large amount of funds will be attracted to the blockchain field. With the influx of more funds, the market size of the blockchain industry will expand rapidly, and the competitiveness of new financial products will be significantly improved. The participation of financial institutions will bring more abundant resources and more professional management experience to the blockchain industry, and promote the healthy development of the industry.
II. Facilitation of cross-border capital flows: Facilitating the transfer of funds related to foreign investors’ investments
The Opinion proposes that, on the premise of authenticity and compliance, all transfers related to foreign investors investments in the pilot areas are allowed to be freely remitted in and out without delay, including: capital contributions; profits, dividends, interest, capital gains, royalties, management fees, technical guidance fees and other fees; proceeds from the sale of all or part of an investment, proceeds from the liquidation of all or part of an investment; payments made under contracts, including loan agreements; compensation or damages obtained in accordance with the law; and amounts generated from dispute resolution.
Crypto Salad Views:
Many readers know that our country has always strictly controlled the inflow and outflow of foreign exchange under the capital account. From the many consultations we have received and our practical experience in handling cases, many times, even if investors meet the formal review requirements of the State Administration of Foreign Exchange or the bank, they still cannot pass the substantive review because they cannot trace the source of funds . The reason is that once the policy concept penetrates into practice, there will be complicated details to comply with. As long as one link is missing, it will affect the entire project.
This is not only the case under the capital account, but also many businesses under the current account have difficulty in foreign exchange circulation. From our experience in serving many overseas companies, when companies remit or settle various foreign exchange payments, such as royalties, management fees and technical guidance fees, they often encounter complex requirements from the bank and need to seek our help.
The introduction of the new policy will not only benefit foreign exchange circulation and make it easier for cross-border investors to operate, but will also significantly improve the capital efficiency of enterprises and reduce management costs.
III. Improving arrangements for cross-border flows of financial data
The Opinion also proposes to facilitate and regulate the cross-border flow of data of financial institutions in pilot areas. Under the framework of the national data cross-border transmission security management system, it explores the formation of a unified compliance standard for the cross-border flow of financial data, clarifies the rules for the cross-border flow of financial data, and allows financial institutions in pilot areas to transmit data required for daily operations to overseas in accordance with the law.
Crypto Salad’s opinion: This policy may have a significant positive impact on RWA
As we all know, the core of RWA is to convert real-world assets (such as real estate, financial certificates, commodities, etc.) into digital tokens and deploy them on the blockchain. This process involves a large amount of data collection, storage and transfer, such as market pricing, reference data, identity information, etc. In order to ensure the accuracy and real-time status of assets, financial institutions rely on cross-border data flows to achieve secure and transparent transactions.
A proactive cross-border data flow policy can not only significantly support the pace of RWA project exploration and implementation, but also effectively reduce the data processing and compliance costs of all parties including financial institutions, speed up operational efficiency, and provide more possibilities for RWA innovation.
We have always said that RWA is very suitable for putting mainland assets on the chain and attracting foreign capital. In the long run, it is also expected to become one of the important ways for domestic enterprises to expand financing channels. The new policy not only allows the free and undelayed inflow and outflow of foreign exchange in the pilot areas, which facilitates cross-border capital flows, but also introduces a cross-border data flow mechanism. It seems to be tailor-made for the implementation of more RWA projects. More domestic and foreign investors and project parties are expected to enjoy policy dividends.
IV. Conclusion
From the experience of implementing various policies in the past, it is not difficult to find that the implementation and promotion of all policies are gradual. The support of the new policy for cross-border financial services and new financial products is only the first step. In the future, with the introduction of more pilot projects, more legal and compliant financial institutions will launch qualified and mature financial products.
Those institutions that can take the lead and launch highlight products before other competing products will surely receive higher attention and capital inflows, forming a demonstration effect and driving more institutions and funds into this field. Therefore, it is recommended that all kinds of financial institutions and investors, especially our partners in the blockchain and crypto asset fields, can maintain long-term and continuous attention to the implementation of various measures of the Opinions by the Peoples Bank of China and relevant departments.
This article only represents the personal views of the author and does not constitute legal advice or legal opinion on specific matters.
