- The local banks in the city are unwilling to serve the crypto firms.
- The firms are restricted, even unable to open local accounts in the banks.
Recent reports claimed that the crypto firms in Hong Kong are under pressure after the debacle of the two major financial institutions, namely Silvergate Bank and Signature Bank. As per the words of the people familiar with the matter, the local banks in Hong Kong refuse to serve the crypto firms, leaving them unable to open local accounts.
Significantly, Joy Lam, a partner at the law company Baker McKenzie asserted that even the licensed crypto firms in Hong Kong are under challenges, claiming:
The abrupt shuttering in the last week of the perceived ‘crypto friendly’ banks in the US has affected a wide swathe of our clients who are engaged in virtual asset related activities, both SFC licensed and unlicensed.
Notably, Adrian Wang, the CEO, and founder of the global crypto-based wealth management company Metalpha commented that though the city owns advanced crypto regulations, with the aspiration to become a crypto hub, after the fall of the financial domains, the banks have become constrained in helping crypto firms.
In addition, Wang posted that the city’s crypto-related companies which had been partnered with Silvergate Bank and Signature Bank are now at risk, finding it difficult to meet their financial requirements. She added:
Quite a few crypto funds and firms we know are seeking to find local Hong Kong banking partners to do business with and [to] prevent the SVB-style crisis from happening to them again.
Though Hong Kong’s current regulations for virtual assets have relaxations over the companionship of local banks and crypto firms, according to the city’s Monetary Authority, these financial institutions should have control over the crypto firms.
Previously, on March 8, the financial services giant Silvergate Bank announced its sudden closure “in light of recent industry and regulatory developments”. Subsequently, its financial companion Signature Bank has been shut down by the New York Department of Financial Services (NYDFS).
Evidently, the closure of both banking companies has shattered the whole financial sector, with institutions and investors being alarmed about the industrial stability.