Chinese Tech Giant Tencent Secures Hong Kong License to Develop Blockchain-based Virtual Bank

With the Chinese government showing its willingness to give a boost to blockchain developments taking place in the country, local organizations have rolled up their sleeves to jump in the blockchain bandwagon.

Recently, China’s internet giant Tencent has secured a license from the Hong Kong regulator - Securities and Futures Commission (SFC) - to develop a blockchain-based virtual bank.

Tencent blockchain chief Yige Cai made the announcement last week while speaking at the World Blockchain Summit in Wuzhen, China. Cai said that having received a green light signal from the SFC, Tencent has already started assembling its team for the project.

Chinese media site Sina Finance quoted Cai saying “Hong Kong’s new regulations and supervision on digital assets transactions validates the importance of blockchain technology and digital assets, which is good news for the whole industry”.

It looks like seeing the global momentum, Hong Kong is taking necessary steps to accelerate crypto and blockchain developments to keep up with the technological shift.

In a move to regulate its local crypto industry, Hong Kong regulators introduced licensing schemes for local exchanges and crypto trading platforms. The licensing scheme ensures that the SFC will monitor all the crypto activities taking place and prevent any illicit practices like money laundering.

Furthermore, the Monetary Authority of Hong Kong (MAHK) is reportedly working with the Bank of Thailand (BoT) for a central bank digital currency (CBDC). It could possibly be the case that Tencent might integrate Hong Kong’s CBDC with its virtual banking platform.

But note that Tencent is not the only one to get the virtual banking. The Hong Kong SFC has provided licenses to 12 other entities which include two institutional investors from Hong Kong and Infinium Limited, a joint venture between Tencent, Industrial and Commerce Bank of China (ICBC).

On the other hand, Tencent has been working for long on its blockchain-based products and services. Recently, the Chinese tech giant published a whitepaper citing global competition in the digital currency space.

In the whitepaper Tencent has specifically mentioned the competition in global payments it would face if Facebook succeeds in launching its native Libra cryptocurrency. Tencent called Facebook’s Libra initiative as “prudent and rational” as well as “bold and radical”.

Tencent’s whitepaper reads: “Any internet company that has a relatively mature digital payment system, such as WeChat Pay and Alipay, would be threatened by the stablecoin if it is ever launched”.