Therefore, instead of targeting retail investors, a truly smart Hong Kong exchange should research opportunities in the "institutional layer": judicial disposal and cross-border wealth management are the most typical scenarios.
And these are precisely the biggest market opportunities for Hong Kong crypto exchanges.
In recent years, virtual currencies have been increasingly appearing in criminal cases and civil and commercial disputes. Court judgments on asset division and virtual currencies seized by public security all require a compliant exchange that can complete a "chain-to-chain" closed loop, and Hong Kong can play exactly this role. It is close to the Chinese judicial system, has a mature licensed system, can ensure compliance, and can solve practical problems.
Due to work reasons, Lawyer Hong Lin has participated in many judicial disposal projects involving virtual currencies, and has learned about pilot documents from several provincial public security departments regarding judicial disposal of crypto assets. Without involving sensitive information, Lawyer Hong Lin can provide a few examples to help everyone better understand the professionalism and complexity of this mechanism.
For instance, when public security handles virtual currencies involved in cases, they require immediately disrupting network signals of the involved wallet to prevent suspects from transferring assets. Involved virtual currencies must be transferred to a qualified custodian to prevent others from secretly transferring funds through private keys or seed phrases.
In the disposal process, public security also requires converting non-stablecoin currencies into stablecoins, then converting them to foreign legal tender, while maintaining complete transaction lists and vouchers to ensure fair pricing, traceable processes, and auditable transactions.
For overseas involved virtual currencies, they need to entrust overseas qualified custodians or disposal entities to assist in freezing and realizing operations. These institutions must hold local financial regulatory licenses and meet China's compliance requirements, and can only be designated for cooperation after verification by the Ministry of Public Security's cybersecurity department.
After the funds are realized, similar to the Beijing model mentioned at the beginning of this article, international payment and restoration declarations must be completed with the central bank and foreign exchange administration before entering domestic accounts for fund settlement and disposal.
This comprehensive regulatory system ensures the legality and compliance of judicial disposal while providing sufficient traceability and security guarantees for future audits.
The existence of such internal rules not only demonstrates judicial authorities' high attention to virtual currency disposal but also reflects the dual defense lines of national financial and data security, further proving that crypto asset disposal is not just a concern for crypto spectators, but a systematic project at the national level.
And the core hub of this project is Hong Kong.
To some extent, whether Hong Kong can become a global crypto financial center ultimately depends not on technical capabilities or user volume, but on whether it can continuously play the role of a "compliant intermediary" within China's institutional boundaries. After all, the Beijing model has clearly shown that Hong Kong's role is indispensable in the legal and compliant judicial disposal and fund repatriation system.
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