Hong Kong’s virtual banks see Web3 growth despite regulatory hurdles
Hong Kong's virtual banks are said to be at a critical stage. Currently, they occupy only a small part of the financial market and account for 0.3% of all retail bank assets.
According to the South China Morning Post (SCMP), HK lawmaker Johnny Ng Kit-chong believes cryptocurrency-backing virtual banks can do more to serve Web3 companies:
“In the past few years, the government has made efforts to develop virtual banks and improve services. […] It is a crucial time for the city to contribute more to the Web 3.0 sector in the next two years.
Related: Hong Kong Virtual Bank Mox Bank Crypto ETF Launches Trading
Problems faced by HK virtual banks
One of the main obstacles facing HK virtual banks is the difficulty of opening accounts for companies looking to expand into cryptocurrencies, non-fungible tokens (NFTs) and blockchain technology.
According to SCMP, a recent survey showed that 40% of these companies found the process “too difficult”, citing the environment and “strong standards” as two frequent challenges.
It has been reported that these challenges have led some businesses to relocate to more favorable regions, a trend that could be beneficial for HK's digital innovation.
Related: Hong Kong Broker Offers Deposit Bonuses to New Clients in Bitcoin
Growth in times of crisis
Despite the challenges, Ng expressed optimism, emphasizing the “enormous” potential for virtual banks given a clear government blueprint for Web3 development.
Mox Bank, owned by Standard Chartered, has launched a crypto exchange-traded fund that facilitates transactions in spot Bitcoin (BTC) and Ether (ETH) ETFs, becoming the first virtual bank in HK.
According to Mox Bank CEO Barbaros Uygun, the bank plans to further expand into emerging sectors and provide customers with new digital investment opportunities.
Related: Hong Kong's Largest Online Broker Launches Bitcoin and Ether Trading for 22 Million Users
HK Legislature Considers BTC for Fiscal Reserves
On July 28, Ng announced plans for collaboration with stakeholders to assess the merits of including BTC into the Special Administrative Region's Financial Reserves.
In X-Post, Ng stated that it is important to consider the integration of BTC in strategic reserves to take advantage of HK's economic framework under the right regulatory conditions.
Dubbed “digital gold,” Ng emphasized BTC's ability to hedge against inflation as global recognition increases due to its value.
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