Bitcoin struggles for acceptance in Hong Kong
Fewer Hong Kong businesses accept bitcoin today than was the case when the virtual currency exploded in popularity and price, in a sign of a struggle to become a mainstream payment option.
Leslie Wu Wai-leung, owner of a Mong Kok-based florist, was still a firm believer in bitcoin despite the adoption rate among businesses and consumers in Hong Kong being “very slow”.
“The adoption rate hasn’t take off locally, but globally it has exploded,” said Wu, the owner of
Flower Delivery Hong Kong, adding that he was well-placed to capture a slice of the consumer spending in bitcoin. Wu said bitcoin was still attractive due to its lower transaction costs for overseas sales, typically less than 1 per cent compared to 5 per cent of the sales cost on PayPal, and there was no limitation on the countries buyers were coming from.
From as many as 20 business accepting bitcoin in 2014, that has scaled back to less than half, according to research by the Post.
Bitcoin’s reputation took a huge blow after a locally-based bitcoin trading platform Bitfinex suffered a security breach to the tune of US$65 million.
The owners of Bitfinex were described as “shy” and “isolated”, according to Leo Weese, president of the Bitcoin Association of Hong Kong, who has met Bitfinex’s management team. “They are very shy... They are a little bit socially awkward, and little bit isolated in how they operate,” he recalled.
Asked how damaging the hack could be for Hong Kong, Weese said it would not have an impact. “But if this leads to public perception it could hinder adoption,” he added.
Weese said the hack could lead to bankruptcy proceedings in a Hong Kong court which could put the city “in the spotlight” on how bitcoin is regulated and the government’s stance on the virtual currency. “Once that’s over we will have clarified a lot of the things around bitcoin that are still currently unclear,” he said.
Zennon Kapron, managing director of Shanghai-based financial industry consultancy Kapronasia, said the hack put pressure on regulators to police virtual currencies.
“Certainly when investors lose any significant amount of money, it raises concerns with the regulators and bitcoin is no different,” said Kapron, adding that regulators have previously indicated bitcoin was an asset similar to baseball cards.
“Regulating bitcoin more firmly may mean acquiescence that the cryptocurrency is much more than just a simple asset, which is something regulators have been loathe to do.”