Hong Kong Banks Resist Despite Cryptocurrency Boom

• Hong Kong’s traditional institutions are struggling to embrace the cryptocurrency sector despite the government’s approval of Bitcoin and Ethereum ETFs last year and the introduction of new crypto regulations on June 1 this year.
• Two major traditional banks have reportedly prohibited all activities directly linked to cryptocurrencies, and many are still resistant to opening accounts where crypto platforms’ funds will be held.
• Regulators in Hong Kong have been urging bank executives to facilitate licensed crypto companies, but the banks’ major concerns revolve around money laundering and the difficulty in conducting risk analysis for crypto firms due to their unclear roadmaps compared to traditional companies.

Resistance to Crypto Adoption Among Traditional Banks in Hong Kong

Government’s Efforts to Promote Crypto Sector

Last year, Hong Kong made significant strides in the cryptocurrency sector by granting approval to Bitcoin and Ethereum ETFs. This year, the government further demonstrated its commitment to the sector by introducing new cryptocurrency regulations on June 1. These actions were aimed at fostering the growth and integration of the crypto industry into the mainstream financial system.

Traditional Banks’ Stance on Cryptocurrencies

Despite the government’s efforts, traditional banking institutions in Hong Kong have been slow to embrace the crypto sector. Reports indicate that two major banks have gone as far as banning all activities directly associated with cryptocurrencies. Furthermore, these banks, among others, have shown resistance to opening accounts where funds from crypto platforms would be held.

Regulators’ Push for Crypto Integration

Regulators in Hong Kong have been actively advocating for the integration of licensed crypto companies into the traditional banking system. They have held discussions with several bank executives, urging them to facilitate these companies. However, these efforts have been met with significant resistance, with the banks citing concerns about money laundering and the difficulty of conducting risk analysis for crypto firms due to their unclear roadmaps compared to traditional companies.

These discussions between regulators and bank executives are expected to continue through the summer and autumn months as they seek to find common ground and foster the growth of the crypto sector in Hong Kong.