Hong Kong Banking Services Clamping Down on Bitcoin Companies

In a clash of old world meets new, Hong Kong Bitcoin companies are facing existential financial disruptions as local banking outlets are shuttering and impeding these companies’ accounts.

This disruptive dynamic has led to a migration of cryptocurrency-related companies from the most autonomous of China’s Special Administrative Regions and challenges to the city’s status as an international “fintech hub.”

For example, there’s the recent high-profle case of Gatecoin — one of the most popular cryptocurrency exchanges in Hong Kong — that was recently forced to suspend customer transfers after their local bank froze the exchange’s account with no prior warning.

Hong Kong’s bitcoin entrepreneurs say they have been forced to open bank accounts overseas to operate their businesses, after local banks froze or closed their accounts, threatening the city’s push to become a fintech hub. https://t.co/LgVCQyEEmG — Kyle Torpey (@kyletorpey) November 20, 2017

Gatecoin marketing director Thomas Glucksmann suggested that Hong Kong’s ruining its international attractiveness for fintech startups by killing off promising startups in the cryptocurrency space:

“It was a major disruption to our business […] We had just tripled our customer base in a two to three month period, the price of bitcoin was rallying, the amount of money clients were depositing was increasing – the timing couldn’t have been worse.”

The bank in question ended up re-activating Gatecoin’s account, sabotaging it with extreme, impractical withdrawal limitations.

Cases like Gatecoin’s appear to be trending, and not exceptions, as of late in Hong Kong. Indeed, Hong Kong Bitcoin Association president Leo Weese noted that crypto startups’ “number one fear” in the locale was account severance:

“The few that do have bank accounts are trying to be as cautious as possible. But ironically, by being cautious, they also raise red flags with banks.”

And the most interesting dynamic that could be in play? Weese’s assertion that Hong Kong banks see Bitcoin and Bitcoin companies as “competitors.”

To this end, and if true, these banks certainly aren’t bearish on the potential disruptiveness of Bitcoin itself.

And with the price of bitcoin eclipsing $8,000 USD for the first time today, will these banks continue to turn a cold shoulder to the space as it becomes increasingly profitable?

It’s doubtable.

TLDR: Banks are making life difficult for Bitcoin companies in Hong Kong, a dynamic that’s led to a flight of cryptocurrency companies from the city.

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