The political uncertainty in the financial hub has resulted in flights of people and businesses from Hong Kong
The US passed the Hong Kong Autonomy Act today in response to China’s increasing attempts at curbing Hong Kong’s freedom. Reports suggest that the Trump administration is considering undermining the Hong Kong Dollar’s peg to the US dollar as a retaliation against Chinese authorities.
Such a move could shatter the Hong Kong Dollar’s value and lead to a currency collapse. Experts believe that this has the potential to spark a massive wave of capital flights from the financial hub into Bitcoin.
Beijing recently passed a new national security law that evidently hands over the territory’s judicial system to China — thus considerably reducing its sovereignty. This means that Hong Kong’s citizens can be deported to mainland China and judged according to Chinese laws.
In fact, the law also provides provisions for Hong Kong citizens to face closed trials, effectively leaving them under the mercy of Beijing. Chaos has ensued in the territory as the new law also criminalises any public criticism of the Chinese Community Party, ending free speech in the financial hub.
The increasing political instability and future uncertainty have already resulted in a flight of people and money from Hong Kong as citizens try to escape before it’s too late. This has further led to a capital flight from Hong Kong to Bitcoin.
Bitcoin is the go-to option for many as it is one of the best mediums to send money overseas and is cryptographically secure, immutable, instant and decentralized.
US attempts to shatter the Hong Kong Dollar could initiate the biggest phase of capital flight from the financial hub. This could also motivate the citizens of Hong Kong to convert their funds into other fiat currencies, Bitcoin, and precious metals before the Hong Kong dollar crashes completely.
Further, such a move could immensely impact a number of cryptocurrency organizations in Hong Kong that are dependent on their access to the U.S. dollar system.
The Hong Kong Dollar currently has a peg of 7.80 HKD per USD and has been pegged to the US dollar for years. The peg has been the cause of a massive influx of capital into Hong Kong and thus, an attempt to unpeg the HKD essentially translates to shattering the Hong Kong economy with sanctions.
Thus, it is only a matter of time until Hong Kong citizens and businesses rush to convert their funds into Bitcoin before the HKD loses its value completely.