Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Friday, Mar 29, 2024

Banking challenges grow for Hong Kong crypto firms after Silvergate, Signature closures

Banking challenges grow for Hong Kong crypto firms after Silvergate, Signature closures

Cryptocurrency firms in Hong Kong are finding it even harder to open local accounts in the city after the closure of world’s two biggest crypto-friendly banks, Silvergate and Signature.

Cryptocurrency firms in Hong Kong have a headache: after the closure of the world’s two biggest crypto-friendly banks, Silvergate Bank and Signature Bank, they are finding it even harder to open local accounts given that banks in the city are not keen to serve them, industry insiders said.

Opening local bank accounts still remains a daunting task for many crypto firms in Hong Kong despite the government’s push to make the city a virtual asset hub. The US Federal Deposit Insurance Corporation (FDIC) last week took control of New York’s Signature Bank, following the rapid collapse of Silvergate and Silicon Valley Bank (SVB). All three banks were, at least at one point, counted among the US’s most crypto-friendly financial institutions.

Hong Kong’s cryptocurrency-related companies, many of which had been banking with Signature or Silvergate, are now scrambling to find ideal banking partners around the world and in their home city.

“Quite a few crypto funds and firms we know are seeking to find local Hong Kong banking partners to do business with and [to] prevent the SVB-style crisis from happening to them again,” said Adrian Wang, founder and CEO of digital asset management firm Metalpha.

But while digital asset regulations in the city have become friendly overall, Hong Kong banks still have stringent requirements when dealing with crypto businesses, Wang said.

Current regulations for virtual assets in Hong Kong do not restrict local banks and financial institutions from working with businesses engaged in crypto related activities, but the Hong Kong Monetary Authority requires banks to perform due diligence and ongoing monitoring of these clients, according to Joy Lam, a partner at Baker McKenzie in Hong Kong whose focus includes virtual assets.

For instance, if the customer is a virtual asset service provider (VASP), the bank will need to see if the VASP is licensed, and assess its Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) controls, according to Baker MacKenzie Hong Kong partner Karen Man.

As many VASPs are not currently licensed in Hong Kong nor registered for AML/CTF requirements, this “poses a significant hurdle for many VASPs to open a bank account in Hong Kong”, Man said.

But even licensed virtual asset firms in Hong Kong face challenges, as they can also find it difficult to open bank accounts and often have very limited options, Lam said.

“The abrupt shuttering in the last week of the perceived ‘crypto friendly’ banks in the US has affected a wide swathe of our clients who are engaged in virtual asset related activities, both SFC licensed and unlicensed,” said Lam.

“Many clients have been scrambling this week to try to find alternative banking options, which is key to the continuity of operations and the protection of investor interests,” she said.

Firms are also looking elsewhere for solutions, including Switzerland, the UK and the United Arab Emirates, where some remaining crypto-friendly banks are based. Hong Kong blockchain-focused hedge fund MaiCapital, for example, is working on opening an account at Switzerland’s SEBA Bank, the firm’s managing partner Marco Lim said.

But many still have concerns for these banks around the world as they are all “relatively small”, said Alan Li, director of Hong Kong-based Da Wan Asset Management.

The bitcoin logo seen on the street in Hong Kong, Dec. 21, 2022.


Hong Kong firms are now hoping that local banks could expand their services and develop solutions fit for crypto companies, now that the government has set its mind to attract such businesses back to the city after a previous exodus.

In October last year, Hong Kong unveiled a range of policies aimed at boosting its virtual asset sector and becoming a hub, and proposed rules on legalising retail crypto trading.

But some industry players think such measures are not enough. There are already multiple ways for retail customers to buy crypto, according to Cyrus Ip, partner at Hong Kong venture capital firm Newman Capital, who argues that the “real question” is that “there’s no proper, regulated, and convenient fiat on-ramp and off-ramp infrastructure in Hong Kong”.

Crypto on-ramps refer to services that offer fiat money in return for cryptocurrencies, while off-ramp means converting cryptocurrencies into fiat money.

“For Hong Kong to become a true Web3 hub, it’s more than government efforts. Private sectors, including the banking sector, must share the same vision and move in the same direction,” Ip said.

Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×