Hong Kong to allow banks to accept crypto firms as client

[naira]

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.

In Hong Kong, according to the government system, obviously they still have a contract with China with a certain time limit. So that as much as possible at this time they are becoming crypto-friendly areas so that their citizens feel complete freedom. But what if the agreement is completed, will banking policy return to normal where the banks that we usually see are always against the existence of crypto and the system that is not liked, it turns out that Hong Kong shows a different attitude. This is what I like about Hong Kong, because it is still in the circular phase and still requires quite a long stage to be formalized globally and enforced in all regions.

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[Fiatless]

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?

This is the opposite case of what is happening in most parts of the world. Most central banks have mandated commercial banks to stop dealing with crypto companies and those that disobey this directive have faced severe sanctions. Most of these banks in Hong Kong are multinational with their headquarters in most crypto unfriendly nations. Most of these banks have been mandated by the. headquarters not to deal with cryptocurrencies and they have to obey even when the host nations state otherwise.

The Central Bank of Hong Kong should take this policy or directive further by including sanctions. Banks that refuse to accept crypto firms should be punished. The bill should be sent to the legislative house and it should be passed onto laws that any bank that goes contrary to the directive of the apex bank should be sanctioned which could include fine, suspension, or even withdrawal of license. They should attack these banks the way central banks attack crypto firms.

[Fortify]

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?

Hong Kong used to be known as one of the three major financial centers of the world, before China got a hold of it and ruined it's credibility forever. Unfortunately the CCP is so opaque and erratic that nobody should trust their money in a Chinese bank, at least not if their based overseas. They'll undoubtedly find a certain range of clients, maybe even trying to pick up something like Binance because the rules have become more relaxed than they were previously, but any company based their is likely to be banned from many other jurisdictions due to the fact that external auditing is untrusted. Anything related to finance requires a lot of stable history, but the Chinese government have shown they are entirely unpredictable in that area.

[Silberman]

Hong Kong used to be known as one of the three major financial centers of the world, before China got a hold of it and ruined it's credibility forever. Unfortunately the CCP is so opaque and erratic that nobody should trust their money in a Chinese bank, at least not if their based overseas. They'll undoubtedly find a certain range of clients, maybe even trying to pick up something like Binance because the rules have become more relaxed than they were previously, but any company based their is likely to be banned from many other jurisdictions due to the fact that external auditing is untrusted. Anything related to finance requires a lot of stable history, but the Chinese government have shown they are entirely unpredictable in that area.

Unfortunately for them the ever-changing attitude the Chinese government has towards this market is not going to help them at all to get the clients they want, as those clients knows very well the Chinese government can change their mind at any time and now they will have to accept massive losses to move away from Hong Kong, so it is obvious that anyone with the smallest amount of knowledge will not move their business there if they have any other option over the table.

[vv181]

The HKMA letter hardly has any direct relevance to cryptocurrency. Besides it is not a complete snippet that depicts the news, anyone interested can see the full HKMA letter at https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2023/20230427e1.pdf.

I don't like how the media portray the central bank to urge banks to accept bitcoin. It seems the letter is more about giving out regulation clarity instead of pressuring the banks to accept crypto firms' clients. To be realistic, it is necessary for the bank to do its own due diligence processes instead of merely being pressured and influenced by its own central bank decision. Essentially, they just inform more regulation clarity. It is expected noting Hong Kong's inclination to be a crypto hub.

[inthelongrun]

The Hongkong government is most likely getting the blessing from China or who knows it is a move by the Chinese government while the US SEC is persecuting crypto companies and groups. China though needs HK to put some pressure or let's say encourage its big banks to accept crypto firms since the US elections are already happening next year. These crypto firms need to acclimatize if they are to relocate to Hongkong and if successful then they might no longer need to transfer again to the US if the Biden administration loses next year.

[Republikcoin.com]

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.

Considering that the letter has already been circulated in Hong Kong, I also hope that there will be very deep progress there which specifically refers to banks that want to support cryptocurrency companies as well as companies that do provide services for cryptocurrency. This is certainly not strange for them as a fairly large country with a very large population, but I was only a little surprised by the circulation of the letter.

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.

As for the adoption of cryptocurrencies in the Chinese region, actually I still doubt it a little because in the past there have been some bad news for cryptocurrencies that also came from there. But if at this point they have started to open their minds to cryptocurrency companies and also instruct banks to support cryptocurrency companies through the letter, I think that is a very good thing because this could have an impact on increasing cryptocurrency prices in the future if it really happened there (Hong Kong).

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?

Their reluctance to accept crypto companies as clients may be because there is news about the SEC inspection that recently occurred on large crypto exchanges so that banks are still hesitant to accept crypto companies as their clients, but they will continue to study this if there is an intention to advance crypto companies in the region.

[usekevin]

The China had some of time to recover their own economic resources.When the China had surplus money,the money flow to the market will be very high.When the flexiblity of bank was increased,we can expect the government to help the people.As the loan was by the government activities reduced,the money flow increased to the maximum and economy activities.

[Hispo]

The Hongkong government is most likely getting the blessing from China or who knows it is a move by the Chinese government while the US SEC is persecuting crypto companies and groups. China though needs HK to put some pressure or let's say encourage its big banks to accept crypto firms since the US elections are already happening next year. These crypto firms need to acclimatize if they are to relocate to Hongkong and if successful then they might no longer need to transfer again to the US if the Biden administration loses next year.

It would be a little strange if indeed Mainland China is behind this sudden acceptance on providing liquidity to centralized exchanges through banks. Because, it would be more convenient for them if their CBDC, the digital Yuan expanded as much as possible without the competition Bitcoin and alternative coins could offer against the Yuan.

One of the only reasonable explanations in the case China is indeed behind this move is for them not to completely be left behind as the crypto ecosystem and adoption continues to grow around the world, it would be a mistake for a superpower like China not to have a plan B in case Bitcoin becomes an international asset/commodity which governments started to accept for their own businesses and foreign commerce.

[bettercrypto]

Whatever the Hongkong government is doing is a good step actually. I hope all countries will be as open to Bitcoin or crypto industry. Perhaps this country also saw that it would bring a lot of good effects to their economy because of the concept that Bitcoin has.

That's why they are now making a good adoption of it in their country for their communities about the innovation technology brought by Bitcoin. This is really a very good decision by Hong Kong, doesn't it seem like this country also said that Coinbase should move to their territory instead of staying in the US country if I'm not mistaken.

[wiss19]

Well, it is obviously something positive for cryptocurrency amid all these bad news circulating all around and this might make a positive impact, but I really doubt if this can be sustainable for the makes and Hong Kong authorities will be able to keep their word. We all know that banks use the money their clients deposit to earn more money, and cryptocurrencies are volatile assets, if firms keep their cryptocurrencies with banks, they won't be able to turn them into liquid cash and if they do so and when the firms demands them back, they might have to lose money to buy and return the assets since prices can go up as well.

So all in all, it's a good news with possibilities of bringing some positivity among traders and the market, but at the same time, it could backfire anytime if the banks suddenly announce that they are not going to do that because it can bring them losses in the long run.

[Kakmakr]

The explanation for this move is simple.....

Once the Banks partner with Crypto currency linked businesses, China can trace more of the Crypto currency transactions. This is not a move to increase Bitcoin (Crypto) adoption, but rather an opportunity for them to identify citizens that are using Crypto currencies.

These businesses are over regulated and it will be a golden opportunity to link people with their coins. Everyone that use these businesses, will lose all pseudo anonymity that the technology offered them. 

[Hamza2424]

I was expecting a good impact on the market but unfortunately, other developments made a reasonable impact. this post made me a reminder some analyses including BalaJii assuming BTC extreme pump upto $1M valuation in 90 days and a maximum of the social media crypto influencers were using the Future (Now Present) developments plans of China going to put a good impact on that prediction but now as time has passed and developments are ongoing still market is standing right there where it was on the time of prediction.

The rest of the things are good currently the impact seems nil but always expect good even from the negativity. But the point is still here a pretty famous macroeconomy analyst even failed to predict the crypto market haha.

[woez]

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?

Their reluctance to accept crypto companies as clients may be because there is news about the SEC inspection that recently occurred on large crypto exchanges so that banks are still hesitant to accept crypto companies as their clients, but they will continue to study this if there is an intention to advance crypto companies in the region.

Very interesting discussion. Let me just add a little. The reluctance of traditional banks to accept crypto companies as clients can be attributed to several reasons and I think that makes sense in light of Regulatory Uncertainty. Well, The regulatory landscape around cryptocurrencies is still evolving in many jurisdictions. Traditional banks operate within a strict regulatory framework and are cautious about engaging with crypto companies due to the potential risks associated with regulatory uncertainty. The lack of clear guidelines and regulations regarding cryptocurrencies can make it difficult for banks to ensure compliance and mitigate legal and financial risks.

Negative news about the condition of the crypto market also sometimes creates a connection between cryptocurrencies with prohibited activities, fraud and fraud, which has created a negative perception in some circles. Banks may be aware of the potential reputational risk that can arise from being associated with crypto companies. Instances of high-profile hacks, exchange failures, and regulatory breaches in the industry have contributed to this in recent times.

[slapper]

Well, it is obviously something positive for cryptocurrency amid all these bad news circulating all around and this might make a positive impact, but I really doubt if this can be sustainable for the makes and Hong Kong authorities will be able to keep their word. We all know that banks use the money their clients deposit to earn more money, and cryptocurrencies are volatile assets, if firms keep their cryptocurrencies with banks, they won't be able to turn them into liquid cash and if they do so and when the firms demands them back, they might have to lose money to buy and return the assets since prices can go up as well.

So all in all, it's a good news with possibilities of bringing some positivity among traders and the market, but at the same time, it could backfire anytime if the banks suddenly announce that they are not going to do that because it can bring them losses in the long run.

Your reflection on banks embracing cryptocurrencies for corporations is profoundly stirring. We must reckon the consequences of this shift, which indeed deviates from established banking traditions. Cryptocurrencies, being highly volatile, might impose substantial risk on banks. If these digital assets appreciate enormously, banks could be strained to fulfill withdrawals. On the flip side, a drastic decline would see firms enduring severe losses. Nonetheless, we can't overlook the potential of this change as a signal of wider acceptance for cryptocurrencies. Its adoption might prompt more entities to view them as tangible assets, thus enhancing stability. However, the feasibility of such a move remains a moot point.

[inthelongrun]

The Hongkong government is most likely getting the blessing from China or who knows it is a move by the Chinese government while the US SEC is persecuting crypto companies and groups. China though needs HK to put some pressure or let's say encourage its big banks to accept crypto firms since the US elections are already happening next year. These crypto firms need to acclimatize if they are to relocate to Hongkong and if successful then they might no longer need to transfer again to the US if the Biden administration loses next year.

It would be a little strange if indeed Mainland China is behind this sudden acceptance on providing liquidity to centralized exchanges through banks. Because, it would be more convenient for them if their CBDC, the digital Yuan expanded as much as possible without the competition Bitcoin and alternative coins could offer against the Yuan.

One of the only reasonable explanations in the case China is indeed behind this move is for them not to completely be left behind as the crypto ecosystem and adoption continues to grow around the world, it would be a mistake for a superpower like China not to have a plan B in case Bitcoin becomes an international asset/commodity which governments started to accept for their own businesses and foreign commerce.

Although it did try as much as possible to stop the growth of bitcoin and crypto by banning them and imposing strict rules to close and issue penalties on miners and investors. China which used to be top or 2nd when it comes to crypto trading volume made it hard for its citizens and investors. Yet bitcoin and crypto as always bounced back and its growth continued as it recorded ATHs every halving cycle. Even some Chinese continued to invest and trade in crypto and its firms relocated outside of China just like Binance the biggest crypto exchange in the world. So Chinese government acknowledges how useful and essential it is by creating its own CBDC. And now letting Hongkong do its crypto adoption trying to lure centralized exchanges.

China indeed does not want to be left behind and I won't be surprised if it lifts its ban on bitcoin and decentralized crypto once the Hongkong experiment is beneficial to them.

[gunhell16]

Another good additional good news for our crypto community in this industry. This is a good step taken by the country of Hong Kong, to be honest. This country is also becoming an excellent example for other countries that still have doubts or doubts about Bitcoin or Cryptocurrency.

It will probably be like other countries that are open to crypto businesses or friendly governments in adopting digital currency like this. Hongkong is doing a good job.

[Silberman]

The explanation for this move is simple.....

Once the Banks partner with Crypto currency linked businesses, China can trace more of the Crypto currency transactions. This is not a move to increase Bitcoin (Crypto) adoption, but rather an opportunity for them to identify citizens that are using Crypto currencies.

These businesses are over regulated and it will be a golden opportunity to link people with their coins. Everyone that use these businesses, will lose all pseudo anonymity that the technology offered them. 

I agree that this is nothing more than a honeypot, on the surface it may seem as if this is a sign of openness towards this market and its investors but this is not true, the government just wants for people to lower their guards and use those banks, and then once enough people have fallen for their ruse they will once again change the rules of the game and tax them to incredibly high levels or they could just take legal actions against them.

[Lamkuthang]

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.

If one grows, the others will definitely follow, especially since there is a policy leeway from the local government in terms of the legality of use. Yes. Asia has a large market share, especially Hong Kong, which has taken off as stated by the OP. previously. We'll just have to see if the progress is progressing or even decreasing enthusiasm in terms of its use.

[so98nn]

Yes they are working very smartly and it started few months ago when Hong Kong released the statement regarding forming an authority through their finance ministry who will keep track of crypto within the country. I think this must one of the element from that development itself. Such happening news from the Japan. Compare this with the US and their regulations in that they are going so strict that banks are filing bankruptcy. Now this is entirely different side of the same giving new hopes to crypto companies and also banks working alongside them. They will definitely have giant accounts as we know very well how much money is transacted via crypto currencies.