Bitcoin businesses are often concerned about having their bank accounts frozen. Such fears have been warranted for quite some time now. In most cases, account closures are few and far between. In the case of various Hong Kong-based businesses, however, things have taken a turn for the worse. In fact, many companies have been forced to look for bank partners overseas.
Another Crackdown on Bitcoin Companies
There is no real reason for any bank in the world to close accounts belonging to Bitcoin users or service providers. While it is true there may be some people using such platforms for illicit purposes, the vast majority of companies have nothing but honest intentions. If those companies are left out in the cold by banks all over the world, things will deteriorate pretty quickly. This very thing is happening in Hong Kong right now.
The South China Morning Post reports that various Hong Kong-based entrepreneurs and companies have been forced to open bank accounts overseas. Operating a Bitcoin business often involves having a bank account – or multiple accounts – provide liquidity in fiat currency. Banks in Hong Kong – none of which are named in the report – have allegedly begun shutting down company bank accounts for their associations with cryptocurrency. It’s a harsh and unexpected turn of events, to say the very least.
While Hong Kong is considered a global fintech hub, things are very different when it comes to Bitcoin and cryptocurrency. In fact, Gatecoin, one of Hong Kong’s biggest cryptocurrency exchanges, is one of the victims of local banks’ sudden change of heart. A representative of its partner bank informed the company that its account had been suspended out of the blue. Although this incident occurred around two months ago, it was only the first of multiple entities to suffer a similar fate. It is an unworkable situation in Hong Kong.
Indeed, Gatecoin’s problems have continued. Its backup banking partner decided to impose strict transaction limits on the account for no good reason. Other companies active in the city have had similar ordeals, yet no one has had any valid explanation as to what is behind all of this. Nor are any of the banks involved eager to comment on this situation, as it is evident that whoever is behind this crackdown is not to be trifled with. Thankfully, most of the affected companies have since successfully set up new accounts in other parts of the world.
It is understandable that Hong Kong banks must adhere to strict AML regulations. So do the Bitcoin companies which make use of these bank accounts. It seems a lot of institutions don’t want to be associated with cryptocurrency right now. That’s strange, given the surge in the popularity of such currencies over the past few months. There doesn’t have to be a schism between banking and Bitcoin, but the banks are more than eager to create such a gap. It’s an odd approach, but one that may spread to other countries around the world as well.
It is unclear how all this will play out in Hong Kong over the next few months. There is no indication as to which banks are or aren’t against Bitcoin and cryptocurrency right now. That said, purposefully causing issues for cryptocurrency-related businesses is not acceptable. Any company looking for an international banking partner will have their work cut out for them as well. Outside of Switzerland and a few other countries, there aren’t too many places where such restrictions aren’t in place or expected to manifest in the coming years.