Hong Kong’s virtual banks are exploring opportunities in the Web3 space despite capturing 0.3% of retail bank assets.
Hong Kong’s virtual banks are reportedly facing a pivotal moment, capturing only a small share of the financial market with just 0.3% of the assets held by all retail banks.
As reported by the South China Morning Post (SCMP), Hong Kong legislator Johnny Ng Kit-chong, a proponent of cryptocurrencies, believes that virtual banks have the potential to serve Web3 companies better.
“The government has made efforts to develop virtual banks and upgrade services in the past few years […] it’s an important time for the city to contribute more to the Web 3.0 sector in the next two years.”
Challenges Faced by HK Virtual Banks
A significant challenge for Hong Kong’s virtual banks is the difficulty in opening accounts for companies interested in expanding into cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology.
According to the SCMP, a recent survey found that 40% of these companies reported finding the process “extremely hard,” citing locational issues and “strenuous standards” as common obstacles.
These difficulties have reportedly led some businesses to move to more favorable regions, a trend that could hinder digital innovation in Hong Kong.
Progress in the Face of Adversity
Despite these challenges, Ng remains optimistic, reportedly stressing the “enormous” potential for virtual banks if the government provides a clear plan for Web3 development.
Mox Bank, owned by Standard Chartered, has taken a step forward by launching a crypto exchange-traded fund (ETF), becoming the first virtual bank in Hong Kong to facilitate transactions in spot Bitcoin and Ether ETFs.
Barbaros Uygun, CEO of Mox Bank, reportedly stated that the bank intends to explore emerging sectors further and offer new digital investment opportunities for its customers.
HK Legislator Looks to BTC for Fiscal Reserves
On July 28, Ng announced plans to collaborate with stakeholders to evaluate the potential benefits of incorporating Bitcoin into the special administrative region’s financial reserves.
In a post on X, Ng emphasized the importance of considering Bitcoin integration into strategic reserves to enhance Hong Kong’s economic framework, provided the right regulatory conditions are met.
Ng referred to Bitcoin as “digital gold,” highlighting its potential to hedge against inflation as global recognition of its value continues to grow.
