A little known paradise to most, the idyllic island of Hainan is China’s best kept secret. From the white sandy beaches, tropical rainforests, sleepy towns and restful resorts, this low profile destination is home to exceptional surf and truly delectable cuisine as well.

You will be pleasantly surprised that Hainan, China’s smallest and southernmost province is now right smack in the middle of blockchain hype. It was back in December last year that the Hainan government announced a series of measures to attract talent and funding.

The Rise of Hainan

Tech companies, blockchain and digital asset firms are now all heading to Hainan as they see a window of opportunity beckoning. The island’s close proximity to South East Asia and relative isolation from the rest of the mainland makes blockchain pilots and the formulation of financial regulatory sandboxes easier.

According to Technode, the province is also China’s first blockchain testing zone, which was officially launched in October last year. Ongoing collaborations with educational institutions like Oxford University’s blockchain research center are designed to help train tech talent and government officials too.

A RMB 1 billion (USD$142 million) fund has attracted over 70 blockchain companies including Baidu Blockchain Lab, 360 Blockchain, Xunlei Blockchain, OK Group and Huobi Group.

A Look through the Rear-view Mirror

For the uninitiated, back in 2017, China announced a blanket ban on crypto-related activities, which included initial coin offerings and digital asset exchanges, which in turn created an untenable situation for blockchain and cryptocurrency establishments in the country. Major trading platforms shifted operations overseas as a result.  

Come 2020, the situation couldn’t be more different. It was back in December last year that OK Group, the operator of OkCoin exchange unveiled a USD$140 million deal with the Hainan government to set up an “Asia Pacific Innovation Center” in the province to help build up the blockchain ecosystem.

Matthew Graham, CEO of Sino Global Capital recently tweeted that crypto exchanges who are willing to work with the government on blockchain initiatives are getting the green light to set up shop in the burgeoning Chinese market.

The Naysayers Have They Say

Not everyone is sold on the idea of the blockchain ecosystem in Hainan though. According to Gu Qianfung, chief technology officer at BTC Media Asia Pacific, Hainan will experience a tough time to retain talent as there will be those just wanting to benefit from favourable policies through opportunistic and adventurous means.

Gu is of the opinion that Hainan’s economy has long been relying on tourism and that the island has a weak foundation for these industries. Unlike Singapore which has a mature digital economy, the situation in Hainan is still very much in its infancy.

South East Asia’s Bright Blockchain-fueled Future

Back in December last year, China convened ministerial-level officials from countries including Singapore, Malaysia, Indonesia, Russia and Kazakhstan at the International Cooperation Forum on Digital Economy and Blockchain in the Hainan Free Trade Zone. 

China wants blockchain technology to align with its Belt and Road initiatives for cross border exchanges in data and e-commerce to facilitate the flow of physical goods, money technology as well as talent.

Many countries expressed openness to the idea, and financial centres like Singapore and emerging economies like Indonesia and Malaysia are keen to expand their existing collaborations with Chinese government and financial institutions too.

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