Growth Aspirations of Hong Kong Virtual Banks in Web3

In Hong Kong, virtual banks, which currently manage a mere 0.3% of retail banking assets, are actively seeking growth opportunities within the Web3 ecosystem.

Current Landscape for Hong Kong’s Virtual Banks

Hong Kong’s virtual banking sector stands at a pivotal moment. Despite their limited share in the financial market, lawmakers like support cryptocurrencies and believe that these banks can do more to assist Web3 enterprises.

“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.”

Obstacles Encountered by Virtual Banks

One major challenge virtual banks face is the difficulty in establishing accounts for businesses that aim to venture into cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology.

Recent surveys indicate that 40% of these businesses find the account opening process to be exceedingly difficult, citing issues such as location and stringent standards.

This cumbersome process has led some enterprises to move to more welcoming jurisdictions, which could hinder the digital innovation landscape in Hong Kong.

Optimistic Developments Amidst Challenges

In light of these obstacles, there remains an air of optimism among industry stakeholders. It has been noted that there is significant potential for virtual banks, particularly if they receive a comprehensive governmental strategy for Web3 advancement.

Mox Bank, a subsidiary of Standard Chartered, has pioneered by launching a crypto exchange-traded fund (ETF), becoming the first virtual bank in Hong Kong to enable transactions in spot Bitcoin (BTC) and Ether (ETH) ETFs.

The bank’s CEO, Barbaros Uygun, has expressed intentions to further explore emerging sectors and introduce new digital investment options for clientele.

Exploring Bitcoin Integration in Fiscal Strategies

On July 28, a legislator announced plans to collaborate with various stakeholders to investigate the advantages of incorporating Bitcoin into Hong Kong’s financial reserves.

In a recent post, the legislator emphasized the importance of considering Bitcoin integration for strategic reserves to bolster Hong Kong’s economy under appropriate regulatory frameworks.

Described as “digital gold,” Bitcoin’s potential to act as a hedge against inflation is gaining traction, especially with its rising global recognition and perceived value.