Hong Kong to allow banks to accept crypto firms as client

[Adams0001]

Hong Kong is a city and special administrative region in China which enjoy some autonomy on its own. It is a city with a population of 7.4 million residents of various nationalities.

Just recently, Hong Kong’s central bank reportedly reiterates on its call for major banks, including HSBC, Standard Chartered and Bank of China to accept crypto firms as clients. Despite the call for this, the banks are hesitant in doing so.

The Hong Kong Monetary Authority (HKMA) encouraged the banks not to be afraid during a meeting after which a circular was released to banking institutions last month.

Below is the HKMA circular to banking institutions in Hong Kong



The circular recommended and encouraged banking institutions to keep track on new market developments and to take a more daring approach to emerging markets like the cryptocurrency market. The institutions were particularly obliged by Hong Kong's central bank to assist cryptocurrency companies, which it refers to as "virtual asset service providers," in acquiring access to banking services.

This new approval by the Hong Kong central bank will make trading crypto a more friendly traded asset in that region that house many populations and also in the adoption of it because of the various nationalities present in that region of China.

Despite the circular and assurance to the traditional banks there, they are still hesitant in accepting crypto firms. What could be their reason for being reluctant in accepting crypto firms as clients?

Source:

https://twitter.com/watcherguru/status/1669373334776078336?s=46&t=AFO-ngiNXBXd6CFRPg8kKg

https://cointelegraph.com/news/hong-kong-government-pressures-bank-giants-accept-crypto-clients

https://watcher.guru/news/hong-kong-urges-hsbc-standard-chartered-to-support-crypto-exchanges

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[PX-Z]

Hongkong the same as Singapore always have the same idealogy regarding being business hub internationally.
But with the previous incident in Hongkong regarding the takeover of the China on the city looks like it hit different from other businesses. Knowing what kind of government China have towards businesses, i dont know.

[crypticj]

This sounds great!
But I don't really trust this news, considering that officials hate bitcoin and crypto. they can block this decision pretty fast.

I think, as long as the government can't tax bitcoin, they won't allow people and companies to freely use it.

And I think right now we don't need it because adoption is moving very slowly, people are afraid of bitcoin because of the price and fluctuations.

[OcTradism]

Hongkong the same as Singapore always have the same idealogy regarding being business hub internationally.

They have same idealogy for their territory developments but they have some big differences in politics.

But with the previous incident in Hongkong regarding the takeover of the China on the city looks like it hit different from other businesses. Knowing what kind of government China have towards businesses, i dont know.

Singapore is a small nation but it does not relate to any territory conflict like Hongkong. Hongkong is like Taiwan which are facing with bigger pressure from China mainland even with army interventions. It puts future of Hongkong into uncertainty and the same for Taiwan.

The news is great as it opens more chances for cryptocurrency and blockchain companies in that island and it is another big support from their governments and banks for the industry. It is a good start but we will need a few months to see real impacts from Hongkong banks for companies in this field.

[ImThour]

This is good news for Crypto and Bitcoin, countries trusting Crypto is a solid move and much needed one in the long run. Most probably they are just inspired from their neighbor, Singapore.
Something that should be fixed in every country is the tax on Crypto gains, it's way too high. Make it similar to what you would pay for gains on stocks? That will be fine.

[YUriy1991]

This is good news for Crypto and Bitcoin, countries trusting Crypto is a solid move and much needed one in the long run. Most probably they are just inspired from their neighbor, Singapore.
Something that should be fixed in every country is the tax on Crypto gains, it's way too high. Make it similar to what you would pay for gains on stocks? That will be fine.

Indeed, this is one piece of good news at a time when the market is very volatile and it signifies the increasing trust and acceptance of cryptocurrencies by countries, which is essential for their long-term survival. It seems like Hong Kong was inspired by its neighbor Singapore, which is known for its crypto-friendly regulations as you say.

As for the tax treatment, In my view These are Different Asset Classes meaning Comparing the tax treatment between cryptocurrencies and traditional stocks may not be appropriate as there are inherent differences. Cryptocurrencies are a relatively new asset class with unique characteristics, and some argue that they should be subject to different tax regulations that reflect their particular features. Implementing a standardized tax framework for crypto profits similar to stocks may require international cooperation and consensus, which may difficult to achieve because tax rates must reflect the potential risks and benefits associated with cryptocurrencies and their impact on the wider economy.

[Asiska02]

Despite the circular and assurance to the traditional banks there, they are still hesitant in accepting crypto firms. What could be their reason for being reluctant in accepting crypto firms as clients?

Bitcoin have gained a lot of popularity in recent times and many people have heard about it. Many negative news have also being attached to bitcoin from those that don’t like the existence of it. We all know bad news spreads like wildfire, the negative notion attached to the use of bitcoin might be the reason these banks are sceptical in accepting crypto firms. They’ll accept it overtime, but it’s going to be a gradual process before many traditional banks there will accept crypto firms fully.

This sounds great!
But I don't really trust this news, considering that officials hate bitcoin and crypto. they can block this decision pretty fast.

I think, as long as the government can't tax bitcoin, they won't allow people and companies to freely use it.

And I think right now we don't need it because adoption is moving very slowly, people are afraid of bitcoin because of the price and fluctuations.

About the tax, it’s a must for the government to adopt it. Every nation needs to collect tax for a sustainable economic work flow in the country. This is not just about the tax, if tax are employed here, the citizens who still know the positive potential part of bitcoin will still venture into it. This is a very good news and hoping for the adoption to continue to increase daily around the world.

[Sarah Azhari]

This sounds great!
But I don't really trust this news, considering that officials hate bitcoin and crypto. they can block this decision pretty fast.

As I know, several news companies have investments in crypto, we can find out if they always present great news for certain coins they invest in, but for Bitcoin, I think they present a piece of real news because Bitcoin is global, they don't have any tendency for that,

I think, as long as the government can't tax bitcoin, they won't allow people and companies to freely use it.

Not all country, like Indonesia where the government takes the Tax for Bitcoin, The company and People still has limited to use of Bitcoin, People can invest in Bitcoin as Digital Asset only, Not for currency and transaction. So If they find it (people use as currency), that tourist will be fined like in Bali a long time ago.

people are afraid of bitcoin because of the price and fluctuations.

Bitcoin price will not be stable until all people countries use it like Dollar. of course that won't happen soon, If they can patient in certain time, they will get profit if follow the halving time.

[noorman0]

-snip-
Despite the circular and assurance to the traditional banks there, they are still hesitant in accepting crypto firms. What could be their reason for being reluctant in accepting crypto firms as clients?

I don't know whether this policy has to get the blessing of China, considering that HK is only a semi-independent country and cannot escape China's supervision.
If the banks also serve mainland Chinese users, then it raises concerns that the government will restrict the banks instead. Or the government could completely intervene in this policy at a later date.

[yhiaali3]

Although I see no justification for this fear if it was the Hong Kong government that officially gave these permits and encouragements to banks.

But I think they may be afraid of getting the same fate as the crypto-supporting banks in the US, maybe they are afraid that the Chinese government will change its attitude towards bitcoin and cryptocurrency in the future and force Hong Kong to ban cryptocurrency.

There could be many reasons, but I expect the most important is regulatory uncertainty, Bitcoin and cryptocurrencies are still at a very early stage in gaining acceptance and full regulation.

[SamReomo]

The decision made by Hong Kong authorities to support Bitcoin and other crypto-currencies is appreciable, however there can be some issues in the initial stages of it. The banks will slowly adopt to the crypto-currency payments and that will really have good impact on the crypto-market in the long run. I think this news is quite sufficient in such times to fix the current problems that the market is facing. If Hong Kong is favoring crypto-currency payments then many neighboring countries will do the same.

I also believe that Hong Kong has been inspired by Singapore to accept crypto-currencies as valuable assets that could be tradable with fiat. I think this is one of the best decisions ever taken by Hong Kong authorities. Although, they have suggested the banks to adopt crypto-currencies, but I still think that banks won't start accepting the crypto-payments anytime soon. However, after sometime most of the banks will have to accept the crypto-currencies.

[bayu7adi]

Although, they have suggested the banks to adopt crypto-currencies, but I still think that banks won't start accepting the crypto-payments anytime soon. However, after sometime most of the banks will have to accept the crypto-currencies.

Banks are expected to embrace companies in the cryptocurrency realm, rather than accepting cryptocurrency as a form of payment. This distinction is crucial because cryptocurrency companies operate within the cryptocurrency space, whereas accepting cryptocurrency as a banking transaction method is an even more radical shift.

In practice, banks accepting cryptocurrency would result in certain circulating cryptocurrency assets being held in custodian wallets. The original owners would not have full control over their funds. This raises concerns related to the concept of "Not Your Key, Not Your Bitcoin," as centralized entities may appear to exploit their clients' wealth for internal banking purposes.

[franky1]

this is not about banks accepting crypto.. this is about banks working with and accepting business from licenced CEX (crypto centralised exchanges)
this would require such CEX to be regulated and monitored and licenced so that the burden of proof of KYC falls on the exchange.. not the bank, thus all the admin of surveillance and reporting of CEX customers trades falls on the CEX to do. whereby the CEX then authorises payments which the bank processes on CEX behalf. not the customer directly.

this then allows the banks to not have the concern/worry of any criminal acts being their fault if a criminal customer of the exchange manages to launder funds. instead it would be the CEX that gets fined/punished for not doing the due diligence

all the banks have to do is ensure the CEX they do business with are regulated/licenced businesses..

this is then as a side-hit going to hurt any hobby/independent exchanges on DEX platforms, whom are unlicensed/using personal accounts, which banks will ban those accounts operating as but not registered as a money service business

[Latviand]

But I think they may be afraid of getting the same fate as the crypto-supporting banks in the US, maybe they are afraid that the Chinese government will change its attitude towards bitcoin and cryptocurrency in the future and force Hong Kong to ban cryptocurrency.

There could be many reasons, but I expect the most important is regulatory uncertainty, Bitcoin and cryptocurrencies are still at a very early stage in gaining acceptance and full regulation.

They're being taken over by the One China policy so it's not really surprising that they're afraid, China's expediting the expiration date of their independence and we all know how notorious China is when it comes to bitcoin and cryptocurrency, push and pull relationship. I don't think a decade is early stage, there's not a lot of things to learn about bitcoin anymore that hasn't been covered already, and the only thing that needs to happen now is the deployment to test it in state level, to learn something new.

[348Judah]

Although I see no justification for this fear if it was the Hong Kong government that officially gave these permits and encouragements to banks.

The justification here is that the people are likely to be getting closer to seing their government realizing what they want and giving them the opportunity and that avenue to display their interest using the decentralized digital currency which is bitcoin, some countries have already sufferd this ban long time ago when their government ban the commercial counterparts, financial institutions banks.

But I think they may be afraid of getting the same fate as the crypto-supporting banks in the US, maybe they are afraid that the Chinese government will change its attitude towards bitcoin and cryptocurrency in the future and force Hong Kong to ban cryptocurrency.

The way things are going now could not be any longer predictable again even as for the government because things are just changing and new outcomes and approach are being experienced from them, this begins with China and we may not know what US will later turn to be despite it current regulation challenges.

[livingfree]

It will take time until these banks will do what's being said to them by the government. It can't be removed that they're scared of this rule that's being enforced since it's possible that they're all aware of its volatility.

This look as a good news. But to implement it and to obey it won't be on an instant and that's why I think that it's going to take a lot of time before it's accepted.

If not, then that's much better as they might become a potential crypto hub which is being pushed by their government to source out every potential income gathering for their country.

[Blitzboy]

HKMA' action propels us towards a fusion of finance and tech. The reluctance of banks underscores the needed transition.

Is it banks' wariness or due diligence? Given crypto' erratic nature, regulatory fog, and abuse risk, their concern seems justified, right?

Yet, doesnt progress demand a step into unknown? Banks will have to adjust. The point is, when will they see its better to lead than lag? Change is a certainty, so why not champion this new economic world? Only time will tell

[pooya87]

Hong Kong will soon attract huge investments

Meh. This news is not big enough to lead to attraction of "huge" investment. Not to mention there are two other reasons why this statement is not true. First is that this is more about regulation than adoption, which means more restrictions and monitoring, specially considering the attitude of China towards bitcoin. It is not like they adopted bitcoin as legal tender.
Secondly in the current economy, with recession and everything, high risk investments (which the crypto industry falls under) are very rare and if they happen they are going to be small. Also one of the reasons why bitcoin price hasn't gone to the moon yet.

[kryptqnick]

The case of Hong Kong shows that legislation isn't everything. Banks are allowed to have crypto clients, but they don't want to do it, even when the central bank is telling them that they should. I guess the banks there still see crypto businesses are rivals rather than potential partners, so they don't want to help them out. It must be hard to artificially create a crypto-friendly environment in a small special part of a big authoritarian state that generally is against decentralization and crypto businesses. Maybe the policy of radically different approaches within one country doesn't work as well as it's supposed to.

[avp2306]

The case of Hong Kong shows that legislation isn't everything. Banks are allowed to have crypto clients, but they don't want to do it, even when the central bank is telling them that they should. I guess the banks there still see crypto businesses are rivals rather than potential partners, so they don't want to help them out. It must be hard to artificially create a crypto-friendly environment in a small special part of a big authoritarian state that generally is against decentralization and crypto businesses. Maybe the policy of radically different approaches within one country doesn't work as well as it's supposed to.

Actually it will not became their rival if they just adopt and allow their clients to store it on their banks. Maybe they are just worried about its volatility so maybe they should do certain disclosure that they cannot do anything with volatility and they can still get according to what volume they deposit.

 This is actually alternative source of income by banks so its ideal if they could just accept it and throw away those doubts about negative things about crypto.