Bitcoin backers bet big on Hong Kong

New York TimesMarch 23, 2014 

— By day, David Shin is an investment banker at a major financial firm. By night and in pretty much every other free minute, he is an entrepreneur looking to break into Hong Kong’s growing Bitcoin scene.

Even as concerns swirl about the long-term viability of the virtual currency, Shin is raising money, courting clients and hiring staff to build a sort of stock exchange for Bitcoin-oriented companies. Shin, 38, plans to start his venture, CryptoMex, at the end of April.

“I believe Bitcoin will bring about a brave new world of money,” he said. “The Internet started out as a revolutionary protocol, became more easy to use over time and saw an explosive growth rate. The same is happening with Bitcoin.”

Shin joins a growing field of technology experts, financial players and crypto-geeks who are betting that an unfavorable regulatory environment in mainland China has put this special administrative region – with its more laissez-faire attitude – on the edge of something big.

Bitcoins, digital money backed by no government and “mined” by computers performing complex algorithms, have been largely unregulated, creating a virtual Wild West of programmers and speculators. But as Bitcoin tries to gain greater mainstream acceptance, authorities around the world have begun eyeing it more cautiously.

In December, the Chinese authorities curtailed the use of Bitcoin by banks and payment processors, which helped halve the value of the virtual currency in two weeks. But Hong Kong – which has retained a separate political and economic system since it returned to Chinese rule – has so far remained relatively passive on the regulatory front.

China is widely seen as the world’s second-largest market for Bitcoin, after the United States. By virtue of proximity, businesses in Hong Kong are hoping to capture some of the demand.

“Like water, Bitcoin may take the path of least resistance and find its way into Hong Kong,” said Michael Chau, a business professor at the University of Hong Kong.

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