As a seasoned researcher with a keen interest in fintech and blockchain, I find myself deeply troubled by the situation unfolding in Hong Kong regarding crypto and Web3 firms. Having closely followed the development of these sectors globally, it is evident that Hong Kong, with its strategic location and robust financial system, could have been an ideal hub for this burgeoning industry. However, the persistent challenges faced by these firms in accessing local banking services are a significant roadblock to their growth and the region’s potential as a global crypto hub.
Johnny Ng, a member of Hong Kong’s Legislative Council, has urged the government to loosen the stringent regulations that make it difficult for cryptocurrency and Web3 companies to access banking services. As an advocate for the growth of Hong Kong as a crypto hub, Ng voiced his worries that these hurdles are hindering the industry’s expansion.
Ng’s appeal comes as a response to persistent challenges faced by crypto firms in opening local bank accounts in Hong Kong. He stated on X that the difficulties in securing banking services are “hindering their ability to conduct business effectively”.
Significantly, a study carried out by Ng’s group, comprising more than 120 cryptocurrency and Web3 companies based in Hong Kong since 2022, presents a troubling portrait.
An Alarming Situation
Approximately 95% of these businesses tried to establish local bank accounts, but only about 20% succeeded within a span of two to five months. Concerningly, more than half of these companies said it took over six months for the process, with numerous entities needing their shareholders or directors to travel to Hong Kong several times to finalize the account opening procedure.
In his proposal, Ng suggests multiple strategies to tackle these challenges, such as establishing a “digital currency bank” and enhancing our current banking system to allow for greater adaptability, functioning harmoniously with conventional banks.
Ng also noted the need for Hong Kong to accelerate the development of its Web3 ecosystem, stating:
At present, international conversations are heavily centered around regulations for digital assets. To establish Hong Kong as a leading hub for Web3 technology, it’s crucial that we accelerate the growth of the blockchain network and ecosystem at the earliest opportunity.
As a crypto investor, I found myself advocating for the government’s consideration of adding Bitcoin to the nation’s financial reserves by mid-July.
Strict Regulations on Crypto Exchanges
Ng’s worries mirror those of other legislators, like Duncan Chiu, who have voiced disapproval over the “overly restrictive” guidelines set for crypto trading platforms. Chiu contends that these harsh regulations have caused significant crypto exchanges to steer clear of Hong Kong, thereby limiting the region’s prospects as a leading global crypto exchange center.
As a researcher, I find myself reflecting on the pivotal moment in 2023 when the Securities and Futures Commission (SFC) of Hong Kong established a licensing framework for centralized cryptocurrency exchanges. This new set of regulations necessitates that these platforms secure a license while meeting stringent conditions, such as upholding anti-money laundering (AML) practices and consumer protection standards. In the face of such rigorous rules, international exchanges like OKX and HKX have chosen to discontinue their activities within Hong Kong’s borders.
In July, the Securities and Futures Commission (SFC) issued a cautionary statement regarding seven digital currency trading sites. Among them were Taurusemex, Yomaex, Bitones.org, BTEPRO, CEG, XTCQT, and Bstorest. The reason for this alert was that these platforms have been operating in the region without obtaining the required licenses to do so.
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2024-08-09 16:09