Hong Kong Legislator Advocates for Relaxation of Banking Regulations for Cryptocurrency Companies

Johnny Ng, a member of the Legislative Council in Hong Kong, has urged the government and banking industry to relax limitations that are obstructing crypto companies from obtaining vital banking services.

Ng pointed out that numerous crypto businesses have encountered considerable difficulties in establishing local bank accounts, which is hindering their operational efficiency.

In a recent post on X, the Hong Kong legislator encouraged virtual banks to expand their offerings and collaborate with traditional banks. He stated:

“Virtual banks should diversify their services and develop in alignment with traditional banks.”

Challenges for Crypto Firms in Hong Kong

Ng’s remarks were supported by a recent survey conducted by his team. The survey collected feedback from over 120 crypto and Web3 companies that have entered Hong Kong since 2022.

The findings indicated that 95% of these firms had sought to open local bank accounts, yet only 20% were successful within a timeframe of two to five months.

For 54% of the participants, the process extended to six months or longer.

The survey also revealed that many banks required shareholders or directors to make several trips to Hong Kong before accounts could be established.

香港金融管理局早前發表虛擬銀行報告。我對於過去特區政府幾年支持銀行業服務升級和虛擬銀行發展表示讚賞，但同時我的團隊做了一個關於Web3公司對香港銀行服務的意見，調查表示，Web3公司出現開户難情況，導致不能有效地發展業務。因此，我今天記者會提出：
1.… pic.twitter.com/srDiDOhvwC

— Johnny Ng 吴杰庄 (@Johnny_nkc) August 9, 2024

The challenges faced by crypto firms in securing bank accounts have remained a persistent concern in Hong Kong, despite the government’s aspirations to establish the region as a global crypto center.

This situation arises as Hong Kong has implemented a crypto licensing framework, permitting licensed exchanges to provide retail trading services.

However, some lawmakers, including Duncan Chiu, have voiced worries that excessively strict regulations are discouraging major global exchanges from entering the market.

Hong Kong’s Efforts in Crypto Regulation

Hong Kong is actively pursuing the development of a comprehensive regulatory framework for the cryptocurrency sector.

Last year, the SFC began consultations on regulatory guidelines for the industry.

In March, the city-state’s licensing regime for Virtual Asset Service Providers was enacted, mandating crypto exchanges to register with the regulator.

The deadline for applications for virtual asset trading platform (VATP) crypto licenses in Hong Kong passed on February 29, with 24 applicants submitting requests.

While Hong Kong continues to strive to be a crypto-friendly environment, the region experienced a series of crypto exchange closures in May.

On March 28, 2024, HKVAEX, believed to be linked to Binance, withdrew its license application.

Following this, on May 14, IBTCEX, QuanXLab, and Huobi HK also withdrew their applications, with Gate.HK on May 22, OKX HK on May 24, and Bybit (Spark Fintech Limited) on May 31.

In June, Hong Kong government representatives attended a technology conference in Toronto, where they promoted the city’s offshore technology hub for Canadian crypto and Web3 startups.

The Hong Kong Economic and Trade Office in Toronto (Toronto ETO), Invest Hong Kong (InvestHK), and StartmeupHK (SMUHK) collaborated to co-host an event at Collision 2024.

The city-state has also focused on decentralized finance (DeFi) and metaverse technologies to enhance its standing in the global fintech arena.

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