Hong Kong is one of the crypto-friendly regions in the world and so far, the region seems to continue to nurture this friendly relationship with the sector. Recently, Hong Kong Legislative Council member Johnny Ng pushed for greater banking accessibility for crypto and Web3 companies in the region.

This initiative aims to remove existing barriers between these crypto-related businesses and the local banking services in the region, which seem essential to their operations, given their connection to financial services.

Banks Struggle for Crypto Firms

Notably, the call to ease banking restrictions came directly from Johnny Ng, who highlighted the ongoing challenges facing crypto and Web3 companies.

Despite Hong Kong’s continued push to position itself as a global cryptocurrency hub, these companies often face strict banking procedures that limit their ability to conduct smooth transactions and grow their businesses.

Ng stressed that these issues pose major obstacles and suggested that virtual banks should expand their services to support the digital asset sector.

In particular, if the region’s banks were to succumb to this press from Ng, it would not only align with Hong Kong’s overall Web3 development ambitions, but it could also support a more conducive environment for innovation and growth in Hong Kong’s digital economy.

To underscore the urgency of the matter, Ng revealed the findings of a survey his team conducted among over 120 crypto and Web3 companies that had recently set up operations in Hong Kong.

The data painted a bleak picture: 95% of these businesses attempted to open a local bank account, and only 20% succeeded in doing so within a reasonable time frame.

Most companies reported excessively long processes, with many taking more than six months to finalise their banking arrangements. As Ng points out, such delays are not trivial as they pose a critical barrier to these companies’ ability to operate and scale in Hong Kong.

A call for change

In response to these challenges, Ng is advocating policy changes that give virtual banks more freedom to manage virtual assets. His message translated on X read:

Virtual banks should add diversified services and develop in a non-aligned relationship with traditional banks. Hong Kong should set up a “virtual assets/digital assets bank” as soon as possible or upgrade the virtual bank to manage virtual assets and coordinate with the SAR government’s Web3 development. Hong Kong should accelerate the development of the Web3 ecosystem.

Notably, Hong Kong continues to refine its cryptocurrency regulations, culminating in the launch of a crypto licensing scheme that extends services to retail investors. So, integrating flexible banking solutions could be a big step forward.

This development could streamline operations for current players and attract new entrants eager to enter the Hong Kong market. Ng concluded:

If we want to become the Web3 center of Hong Kong, we must promote the development of the entire chain and ecosystem as soon as possible.

Main image created with DALL-E, chart from TradingView