New policies in the financial sector introduce new opportunities for cross-border investment and the Blockchain industry

On January 22, 2025, five ministries jointly issued an opinion on piloting the alignment of the financial sector with international high standards to promote institutional opening. This document proposed 20 policy measures covering various aspects such as the services provided by foreign financial institutions, the purchase of cross-border financial services, the facilitation of capital transfer for foreign investors, and the cross-border flow of financial data. This marks the arrival of a new wave of openness in the financial industry and also brings potential opportunities for cross-border investment, Blockchain, and the cryptocurrency industry.

1. New Financial Services Pilot and "Cross-border Wealth Management Connect" Expansion

The new policy allows the development of new financial services in designated pilot areas. These services refer to financial products that have been provided and regulated in other countries or regions but have not yet been launched within our country. Notably, the policy mentions that it will optimize the "Cross-Border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area, supporting mainland residents to purchase qualified investment products through Hong Kong and Macao financial institutions, and expanding the range of participating institutions and products.

This initiative may provide mainland investors with a richer array of investment options. For example, innovative financial products such as virtual asset ETFs in Hong Kong may open up to mainland investors through the "Cross-Border Wealth Management Connect," offering investors more diversified investment opportunities.

Foreign financial institutions will be allowed to launch new financial services similar to those of domestic financial institutions in pilot areas. The financial regulatory authorities have promised to make a decision on qualified applications within 120 days, which will accelerate the implementation of new financial services.

2. Facilitation of Cross-Border Capital Flow

The new policy allows pilot areas to freely remit funds related to foreign investors under the premise of real compliance, including capital contributions, profits, dividends, interest, capital gains, and more. This initiative will significantly enhance the convenience of cross-border investment, reduce companies' capital management costs, and create a more flexible investment environment for investors.

3. Cross-border flow arrangements for financial data

The policy proposes to facilitate and regulate the cross-border flow of financial institution data in pilot areas, exploring the formation of a unified compliance standard for cross-border financial data flow and clarifying relevant rules. This initiative may have significant positive implications for Real-World Asset (RWA) tokenization projects.

RWA involves converting real-world assets into digital tokens and deploying them on the Blockchain, requiring extensive data collection, storage, and transfer. New policies are expected to support the implementation of RWA projects, reducing data processing and compliance costs while improving operational efficiency. In the long run, RWA may become one of the important ways for domestic enterprises to expand their financing channels.

4. Summary and Outlook

The introduction of the new policy is just the first step; in the future, more pilot projects may be introduced, and more legal and compliant financial institutions may launch mature financial products. Institutions that are the first to launch innovative products are expected to gain higher visibility and capital inflow, creating a demonstration effect.

It is recommended that financial institutions and investors, especially participants in the blockchain and cryptocurrency asset sectors, continue to pay attention to the specific implementation measures of this policy by the People's Bank of China and relevant departments. With the gradual implementation of the policy, we may see the emergence of more innovative financial products, bringing more opportunities for investors and simultaneously promoting the blockchain industry to develop in a more standardized and mature direction.