Hong Kong’s push to reinstate itself as a crypto hub has seen numerous applications from crypto companies pile up, but they face challenges with basic operations, such as opening bank accounts. With just eight officers at the Securities and Futures Commission (SFC) handling around 80 applications, even licensed firms struggle with banking access. Despite the Hong Kong Monetary Authority (HKMA) reminding banks that there’s no ban on offering accounts to crypto firms, a recent roundtable focused purely on easing access for firms that held or were applying for licenses. This, however, might not guarantee banks will embrace the sector.
In fact, some crypto companies holding a Type 9 license, which permits asset management activities, still cannot open a Hong Kong bank account and rely on overseas banking partners. This situation hinders on and off-ramping for potential investors. Some companies even present themselves as non-asset management firms to open bank accounts more easily.
Opening bank accounts has become an “acute issue” with banks acting sensitively and restrictively. Louie Lee, managing director of Prosynergy, highlighted that although not all crypto-related activities require a license, that doesn’t make them illegal. Jehan Chu, founder of crypto venture capital firm Kenetic, mentioned that even if firms manage to open accounts, they can be inexplicably closed within months. To create a more valuable relationship with banks, some firms invest in costly insurance or investment products. However, for many startups, this proves unaffordable.
The lack of visibility on banking options prompts firms to constantly seek new opportunities and account setups. Banks’ review of transactions may lead to account usage being blocked unless an appropriate amount of documentation is provided on these transactions. In essence, companies are subject to the whims of account providers and dedicate significant resources to opening bank accounts.
This is not the first time industries in Hong Kong have encountered banking issues. Some licensed money-service operators were denied access to banks due to anti-money laundering and counter-terrorist financing risk concerns. Initiatives from regulators, such as deposit requirements, might instill more confidence in banks. However, recent collapses of licensed crypto companies in Singapore, another Asian financial hub, could contribute to undermining that confidence.
Despite everything, most industry players remain optimistic about future dialogues between the crypto industry and regulators in terms of banking access. The recent roundtable, according to Lee, is a step in the right direction where regulators and industry members can engage in constructive discussions to seek practical solutions.
Source: Coindesk
