Hong Kong Lawmaker Pushes for Eased Regulations on Crypto and Web3 Banking

Johnny Ng, a member of the Hong Kong Legislative Council, has called on the government and local banks to relax the stringent restrictions that currently hinder crypto and Web3 companies from accessing essential banking services. Despite Hong Kong's aspirations to become a leading hub for cryptocurrency and Web3 innovation, many firms in these sectors continue to struggle with opening local bank accounts, significantly impacting their ability to operate effectively.

Ng took to social media platform X today to highlight the ongoing difficulties faced by Web3 companies in establishing banking relationships. He noted that these challenges are not just inconveniences but serious obstacles that "hinder their ability to conduct business effectively." Ng emphasized the need for virtual banks in Hong Kong to expand and diversify their services, suggesting that these digital institutions should work in tandem with traditional banks to better accommodate the needs of the crypto and Web3 sectors. He also proposed that Hong Kong should enhance the capabilities of virtual banks to manage virtual assets, aligning with the government's broader goals for Web3 development.

During a press briefing on Thursday, Ng shared insights from a recent survey conducted by his team, which polled over 120 crypto and Web3 firms that have entered Hong Kong since 2022. According to the survey, around 95% of these companies attempted to open local bank accounts, but a significant 70% reported that banks required their shareholders or directors to make multiple visits to Hong Kong as part of the process. The survey further revealed that only about 20% of the respondents managed to open bank accounts within two to five months, while 54% had to wait six months or longer to successfully establish their accounts.

The issue of opening bank accounts has been a longstanding challenge for crypto firms in Hong Kong, even as the government continues to promote the region as a global crypto hub. Last year, Hong Kong extended a warm welcome to crypto companies, and in June 2023, it launched a new licensing regime for crypto trading platforms. This regulatory framework allows licensed exchanges to offer retail trading services, marking a significant step in the region's crypto journey.

However, concerns over regulatory hurdles persist. Duncan Chiu, another Hong Kong lawmaker, has also voiced his criticism of what he describes as "excessively stringent" regulations that make it difficult for crypto exchanges to obtain the necessary licenses. Chiu argued that these rigorous requirements have deterred major global exchanges from entering the Hong Kong market. As a result, several prominent exchanges, including OKX, Gate.io, and HTX, have withdrawn their license applications in the region.

Ng's and Chiu's remarks underscore the ongoing tension between Hong Kong's ambitions to lead in the crypto space and the practical challenges faced by companies trying to establish themselves in the region. Their calls for regulatory and banking reforms highlight the need for a more supportive environment that can accommodate the fast-growing crypto and Web3 sectors.