Interpretation of New Open Policies in the Financial Sector: Opportunities for Cross-Border Investment and the Blockchain Industry

On January 22, 2025, five ministries jointly released the "Opinions on Promoting Institutional Opening Up to High International Standards in the Financial Sector in Conditional Free Trade Pilot Zones (Ports)." This document proposed 20 policy measures, covering various aspects such as allowing foreign financial institutions to provide new types of financial services, supporting cross-border purchases of overseas financial products, simplifying the fund transfer process for foreign investors, and improving arrangements for the cross-border flow of financial data.

These measures mark a new wave of opening up in our country's financial sector, while also bringing potential benefits to cross-border investment, Blockchain, and the cryptocurrency industry. This article will conduct an in-depth analysis of this.

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

Overview of New Financial Services and Pilot Areas

New financial services refer to financial services that are not yet offered domestically but have been practiced and regulated in other countries or regions. These innovative services will first be piloted in regions such as the Shanghai, Guangdong, Tianjin, Fujian, Beijing Free Trade Pilot Zones, and Hainan Free Trade Port.

The special status of the "Cross-Border Wealth Management Connect" in the Guangdong-Hong Kong-Macao Greater Bay Area

"Cross-Border Wealth Management Connect" is a distinctive financial product of the Guangdong-Hong Kong-Macau Greater Bay Area, providing mainland residents with convenient cross-border investment channels and a rich variety of product choices. The introduction of new policies will further expand the range of participating institutions and the types of eligible investment products, which may include innovative financial products such as virtual asset ETFs from Hong Kong, bringing more diversified investment opportunities to mainland investors.

Participating Institutions and Application Process

The new policy allows foreign financial institutions to carry out the same types of new financial services as domestic financial institutions in pilot areas. Financial regulatory authorities have committed to making decisions on eligible applications within 120 days, which will accelerate the launch of innovative financial products.

2. Facilitation of Cross-border Capital Flow

The new policy significantly simplifies the cross-border transfer process of funds related to foreign investment. Under the premise of ensuring authenticity and compliance, pilot areas will allow the free inflow and outflow of investment-related funds, including various types of payments such as capital contributions, profits, dividends, interest, and capital gains.

This initiative is expected to significantly enhance the convenience of cross-border investment, reduce companies' capital management costs, and create a more favorable investment environment for international investors.

3. New Arrangements for the Cross-Border Flow of Financial Data

The "Opinions" propose to explore the establishment of unified compliance standards for the cross-border flow of financial data under the national data security management framework, clarify relevant rules, and allow financial institutions in pilot regions to transmit the necessary data for business to overseas in accordance with the law.

This policy may bring significant benefits to real-world asset tokenization (RWA) projects. RWA involves converting real-world assets into digital tokens on the Blockchain, requiring extensive data collection, storage, and cross-border transmission. The new policy is expected to reduce financial institutions' costs in data processing and compliance, improve operational efficiency, and provide more possibilities for the innovation and implementation of RWA projects.

In the long run, RWA may become one of the important ways for domestic enterprises to expand financing channels. The new policy not only facilitates cross-border capital flow but also introduces a mechanism for cross-border data flow, creating favorable conditions for the implementation of RWA projects.

Summary

The introduction of this new financial opening policy is a gradual process. With the introduction of more pilot projects, we expect to see more compliant financial institutions launching mature innovative financial products. Institutions that are able to take the lead in launching standout products are likely to gain higher market attention and capital inflows, creating a demonstration effect that will attract more institutions and funds into related fields.

It is recommended that financial institutions and investors, especially participants in the blockchain and cryptocurrency asset sectors, continuously monitor the implementation of various measures related to the "Opinions" by the People's Bank of China and relevant departments, and seize the development opportunities brought by the new policies.