Topic: Hong Kong to allow banks to accept crypto firms as client (Read 507 times)

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 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.

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. 

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.

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.

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.

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.

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.

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?

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?