A new wave of openness is coming to the financial sector, and cross-border investment along with the Blockchain industry may welcome new opportunities.

On January 22, 2025, five departments jointly issued the "Opinions on Promoting Institutional Opening in Conditional Free Trade Pilot Zones (Ports) in the Financial Sector to Connect with International High Standards" (hereinafter referred to as the "Opinions"). This document proposes 20 policy measures covering areas such as allowing foreign-funded financial institutions to provide financial services of the same type as domestic financial institutions, supporting the lawful cross-border purchase of specific overseas financial services, and simplifying the fund transfer processes related to foreign investors' investments.

These measures not only signify the arrival of a new round of openness in the financial industry but also contain significant opportunities for participants focused on cross-border investment, Blockchain, and the cryptocurrency industry. This article will analyze in detail the potential impacts these changes may bring.

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

Definition of New Financial Services and Pilot Areas

The new financial services mentioned in the "Opinions" refer to financial services that have not yet been provided within our country but are already offered and regulated in other countries or regions. These services will be piloted in areas such as the Shanghai, Guangdong, Tianjin, Fujian, Beijing Free Trade Pilot Zones, and Hainan Free Trade Port.

The special status of the Guangdong-Hong Kong-Macao Greater Bay Area

It is worth noting that the "Opinions" specifically mention the continuous optimization of the "Cross-border Wealth Management Connect" pilot in the Guangdong-Hong Kong-Macao Greater Bay Area. This means that residents of the Greater Bay Area in mainland China will be able to purchase a more diverse range of qualified investment products through Hong Kong and Macao financial institutions, and the scope of participating institutions and types of investment products will also be expanded.

This initiative may provide mainland investors with more diversified investment options, including the potential introduction of innovative financial products from Hong Kong, such as virtual asset ETFs.

Participating Institutions and Application Process

The "Opinions" allow foreign financial institutions to carry out new financial services similar to those of domestic financial institutions in pilot areas. The financial management department will make a decision on eligible applications within 120 days according to the principle of consistency between domestic and foreign.

This policy is expected to promote the innovation of compliant products in the blockchain field, provide indirect investment opportunities for investors, attract more capital inflow, expand market size, and enhance the competitiveness of new financial products.

II. Facilitation of Cross-Border Capital Flow

The "Opinion" proposes that, under the premise of ensuring authenticity and compliance, pilot areas are allowed to freely remit relevant funds in and out with foreign investors without delays. This includes various types of funds such as capital contributions, profits, dividends, interest, capital gains, royalties, management fees, and technical guidance fees.

This policy not only benefits foreign exchange circulation and facilitates operations for cross-border investors, but also significantly improves the capital efficiency of enterprises and reduces management costs. For investors and enterprises that have long faced challenges of foreign exchange controls, this is undoubtedly a major advantage.

III. New Arrangements for Cross-Border Flow of Financial Data

The "Opinions" also proposed measures to facilitate and regulate the cross-border flow of financial institution data in pilot areas. Under the framework of the national data cross-border transmission security management system, efforts will be made to explore the formation of unified compliance standards for the cross-border flow of financial data, clarify relevant rules, and allow financial institutions in pilot areas to transmit data necessary for their daily operations to overseas in accordance with the law.

This policy may have significant benefits for the tokenization of real-world assets (RWA). RWA projects involve the collection, storage, and transfer of large amounts of data. The new policy can not only support the implementation of RWA projects but also reduce the costs related to data processing and compliance for all parties, improving operational efficiency. In the long run, this could become one of the important ways for domestic companies to expand their financing channels.

IV. Outlook

This new policy's support for cross-border financial services and new financial products is just the first step. In the future, with the introduction of more pilot projects, it is expected that more legitimate and compliant financial institutions will launch mature financial products.

Institutions that are the first to launch innovative products may gain higher attention and capital inflows, creating a demonstration effect that attracts more institutions and funds into the field. Therefore, it is recommended that financial institutions and investors, especially participants in the blockchain and cryptocurrency asset sectors, continuously pay attention to the implementation of various measures regarding the "Opinions" by the People's Bank of China and relevant departments.