Crypto dealers find willing partners at Hong Kong banks seeking to fill SVB void amid city’s virtual asset push
- Hong Kong’s licensed digital asset trading platforms are partnering with both local virtual banks and larger Chinese institutions
- As the city prepares new licensing requirements and greater retail participation, more competitors are expected navigate tough requirements to enter the market
Crypto platforms in Hong Kong are opening accounts and partnering with local banks, as the city attracts more market players ahead of passing its new licensing regime as part of an effort to become a virtual asset hub.
Last week, Hashkey Group, a digital-asset service provider based in Hong Kong, announced a partnership with ZA Bank and the Hong Kong arm of China’s state-owned Bank of Communications to launch a virtual asset trading platform called HashKey Pro, which will facilitate trades in some major cryptocurrency tokens.
“Our partnership with local virtual bank ZA Bank is only a starting point, and we plan to collaborate with other financial institutions to offer our clients a diverse range of solutions,” Hashkey Pro CEO Colin Zhong said.
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The city’s new crypto-friendly approach has left some finance firms looking to be a new source of liquidity in the industry.
“Our platform aims to set the bar for virtual assets exchanges in Hong Kong for compliance, safety, and security by obtaining regulatory approval and certifications,” Zhong said. HashKey Pro will open to professional investors in the second quarter, according to Zhong, and eventually to retail investors.
“Once we have the license uplifted, and once the SFC’s retail trading policies are in place, then we’re looking to offer those to our retail clients,” he said.
The platform plans to “bring a range of tokenised financial products to retail investors”, Tiu said.
However, representatives from Hashkey and OSL say this process is not easy, as it involves professional auditors, banks, and external consultants to provide independent compliance assessments.
But with the licensing requirement just weeks away from kicking in, crypto firms are opening up accounts in the city. Lily Z. King, chief operating officer of digital asset custody solutions provider Cobo, said the company has been communicating with several banks seeking to open local accounts.
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“Historically, crypto companies have faced challenges when trying to access traditional banking services, even for operating accounts that are used for salary payment and vendor service payment,” King said.
“With Hong Kong’s upcoming licensing regime, digital asset companies see an opportunity for clearer regulatory guidelines, which might lead to better access to traditional bank account services,” she added.
Part of the appeal of Signature Bank and SVB was that they worked 24/7 to settle cryptocurrency trades quickly. Now Hong Kong’s eight virtual banks could attract some of that business because of their own around-the-clock offerings, said Cobo co-founder and CEO Mao Shixing.
While Hong Kong’s larger financial institutions are likely to avoid unlicensed crypto companies because of high compliance standards, smaller banks may be more willing to work with such firms, according to Isabella Wong, a financial services partner at Deacons law firm.