On January 22, 2025, the People's Bank of China, the Ministry of Commerce, the Financial Regulatory Administration, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the "Opinions on Pilot Programs for Conditional International High Standards in the Financial Sector in Free Trade Pilot Zones (Ports) to Promote Institutional Opening" (hereinafter referred to as the "Opinions").
The "Opinions" allow foreign financial institutions to provide financial services similar to those of Chinese financial institutions, support the lawful cross-border purchase of certain types of overseas financial services, facilitate the transfer of funds related to foreign investors, and improve arrangements for the cross-border flow of financial data, among other aspects, proposing 20 policy measures.
These policy measures mark the arrival of a new wave of openness in the financial industry. For participants focused on cross-border investment, blockchain, and the cryptocurrency industry, these changes also contain significant connections and potential benefits. This article will analyze them one by one.
1. Investors Can Invest in New Financial Services Through the "Cross-Border Wealth Management Connect" Pilot in the Guangdong-Hong Kong-Macao Greater Bay Area
What Are New Financial Services? What Investment Products Are Available in the Guangdong-Hong Kong-Macao Greater Bay Area?
The new financial services mentioned in the "Opinions" refer to financial services that are not provided within China but are offered and regulated in other countries or regions. New financial services will be piloted in Shanghai, Guangdong, Tianjin, Fujian, Beijing Free Trade Zones, and Hainan Free Trade Port, as well as in cooperation platforms designated by the Central Committee of the Communist Party of China and the State Council to undertake important tasks for opening up.
This regional pilot model allows us to expect to see distinctive pilot rules in various regions, which is worth looking forward to.
What is even more noteworthy is that the "Opinions" specifically mention that new financial services will continue to optimize the "Cross-Border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area, supporting residents in the Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macao financial institutions through these institutions, and expanding the range of participating institutions and qualified investment products.
Why is the Guangdong-Hong Kong-Macao Greater Bay Area so special? This is because the "Cross-Border Wealth Management Connect" regional financial product model has already provided mainland residents with innovative and convenient cross-border investment paths and a rich variety of product choices, making it a "vanguard" and "stronghold" in China's cross-border investment field. The introduction of comprehensive pilot relaxations for foreign financial institutions' participation, types of overseas financial products, and foreign exchange transfer restrictions further boosts its development.
Taking the typical Hong Kong Securities and Futures Commission licensed cryptocurrency asset management business as an example, these products were originally only available in Hong Kong. However, with the launch of the new pilot framework, innovative financial products such as virtual asset ETFs in Hong Kong may be opened to mainland investors through the Cross-Border Wealth Management Connect, further enriching the investment choices for mainland residents.
Which Institutions Can Participate in Product Launches? How to Apply for New Financial Services?
The "Opinions" allow foreign financial institutions to provide new financial services similar to those of Chinese financial institutions in the pilot areas.
Financial regulatory authorities can make decisions on complete and legally compliant applications submitted by foreign financial institutions, investors of foreign financial institutions, and cross-border financial service providers to conduct financial services in the pilot areas, within 120 days from the date of acceptance, and promptly notify the applicants.
Crypto Salad's View:
With the promotion of the new policy, the blockchain field is expected to welcome 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 opportunities for indirect investment. This compliant channel will inject new vitality into the development of the blockchain industry, pushing it from the gray area into the sunlight.
Once these products are launched, they will attract a large influx of funds into the blockchain field. With more funds flowing in, the market size of the blockchain industry will rapidly expand, and the competitiveness of new financial products will be significantly enhanced. The participation of financial institutions will bring richer resources and more professional management experience to the blockchain industry, promoting its healthy development.
2. Facilitating Cross-Border Fund Flows: Easing Foreign Investors' Related Fund Transfers In and Out
The "Opinions" propose that, under the premise of genuine compliance, all transfers related to foreign investors' investments in the pilot areas are allowed to flow freely in and out without delay, including: capital contributions; profits, dividends, interest, capital gains, royalties, management fees, technical guidance fees, and other expenses; all or part of the proceeds from the sale of investments, all or part of the proceeds from the liquidation of investments; payments made under contracts, including loan agreements; compensations or damages obtained lawfully; and payments arising from dispute resolution.
Crypto Salad's View:
Many readers are aware that our country has always strictly regulated the inflow and outflow of foreign exchange under capital items. From the numerous consultations we have received and our practical case handling experience, many times investors, even if they meet the formal review requirements of the foreign exchange bureau or banks, still fail to pass the substantive review due to reasons such as the inability to trace the source of funds. The reason is that once policy concepts penetrate into practice, there are numerous complex details that need to be followed, and if one link is missing, it can affect the entire project.
This is not only the case for capital items; many businesses often face difficulties in foreign exchange circulation. From our experience serving many overseas enterprises, when companies remit or exchange various foreign currency payments, such as royalties, management fees, and technical guidance fees, they often encounter complex requirements from banks, requiring our assistance.
Now, with the introduction of the new policy, it not only significantly benefits foreign exchange circulation, facilitating cross-border investors' operations but also significantly enhances the efficiency of corporate funds and reduces management costs.
3. Improving Arrangements for Cross-Border Flow of Financial Data
The "Opinions" also propose to facilitate and regulate the cross-border flow of data from financial institutions in the pilot areas, exploring the formation of a unified compliance standard for the cross-border flow of financial data within the framework of the national data cross-border transmission security management system, clarifying the rules for the cross-border flow of financial data, and allowing financial institutions in the pilot areas to lawfully transmit data necessary for daily operations to overseas.
Crypto Salad's View: This Policy May Bring Significant Benefits to RWA
It is well known that the core of RWA is to convert real-world assets (such as real estate, financial certificates, bulk 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 of assets, reference data, identity information, and more. To ensure the accuracy and timeliness of asset status, financial institutions rely on cross-border data flow to achieve secure and transparent transactions.
Active policies for cross-border data flow can not only significantly support the exploration and implementation of RWA projects but also effectively reduce the costs of data processing and compliance for all parties, including financial institutions, and accelerate operational efficiency, providing more possibilities for RWA innovation.
We have always said that RWA is very suitable for being placed on-chain for mainland assets to attract overseas capital, and in the long run, it is expected to become one of the important ways for domestic enterprises to broaden financing channels. The new policy not only allows for the free and timely inflow and outflow of foreign exchange in the pilot areas, providing convenience for cross-border fund flows, but also introduces a mechanism for cross-border data flow, seemingly tailored for the implementation of more RWA projects, allowing more domestic and foreign investors and project parties to enjoy policy dividends.
4. Conclusion
From past experiences in implementing various policies, it is not difficult to find that the implementation and promotion of all policies are gradual. The new policy's support for cross-border financial services and new financial products is just the first step. In the future, with the introduction of more pilot projects, more legitimate and compliant financial institutions will launch qualified and mature financial products.
Which institutions can take the lead in launching standout products before others will undoubtedly gain higher attention and capital inflow, creating a demonstration effect and driving more institutions and funds into the field. Therefore, it is recommended that various financial institutions and investors, especially our partners in the blockchain and cryptocurrency fields, maintain long-term and continuous attention to the implementation of the "Opinions" by the People's Bank of China and relevant departments.
This represents the personal views of the author of this article and does not constitute legal consultation or legal advice on specific matters.
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