According to recent reports, crypto businesses within Hong Kong are under pressure after the fiasco of two large financial institutions, Silvergate Bank and Signature Bank. According to those acquainted with the situation, local banks in Hong Kong refuse to assist crypto companies, preventing them from opening local accounts.
According to Joy Lam, a lawyer at the legal firm Baker McKenzie, even the permitted cryptocurrency enterprises within Hong Kong need help. She said that a wide variety of customers involved in Various regulated and unauthorized activities relating to virtual assets had been negatively impacted by the unexpected shutdown of the banks in the US that were thought to be “crypto-friendly.”
Metalpha CEO on crypto
Notably, Adrian Wang, the CEO and founder of the global crypto-based wealth management company Metalpha observed that even though the city possesses advanced crypto regulations and has the aspiration to become a crypto hub, the banks have become constrained in their ability to assist crypto firms because of the fall of the financial domains.
According to Wang, the city’s crypto-related businesses collaborating with Silvergate Bank and Signature Bank were in jeopardy and finding it difficult to satisfy their financial obligations. She said that various crypto funds and organizations were looking for local Hong Kong banking partners to conduct business with to avoid another problem like the one with SVB.
Even though Hong Kong’s current regulations for virtual assets allow local banks and cryptocurrency firms to work together without interference from the government, the city’s Monetary Authority believes that the banks and other financial institutions should still have authority over the cryptocurrency companies.
Regulatory developments close banks
Before this, on March 8, the massive financial services provider Silvergate Bank announced that it would be closing “in light of recent industry and regulatory changes.” As a direct result, the New York Department of Financial Services has ordered the closure of its affiliated financial institution, Signature Bank (NYDFS).
The closure of both banking businesses caused the financial industry’s collapse; as a result, institutions and investors are concerned about the industry’s capacity to remain stable.