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Several crypto companies in the US are facing major regulatory challenges and have announced their plans to relocate offshore.
US exit by crypto companies
The US Securities and Exchange Commission (SEC) has taken a more stringent regulatory approach, and therefore, companies like Coinbase, Kraken and Binance have warned they might leave the US in the event that regulators do not come up with clear regulations.
Binance has taken several steps, including ending partnerships and trading activities in the US, while Coinbase has recently received a licence for the Bahamas, which has excited the crypto community.
Huobi and OKX - both founded on the mainland, but having exited after earlier crackdowns, announced they are applying for SFC licences. Crypto firms are now opening accounts in the city, as the licensing requirement is just a few weeks away.
However, representatives from Hashkey, OSL, and other crypto firms say that the process for a licence is difficult, since it requires much resources, time, and money to be spent on professional companies skilled in compliance.
Hong Kong seen as a viable crypto hub
In response to the SEC's and other regulators' actions, other crypto firms are convinced that Hong Kong could become a major hub for crypto and have started applying for a licence. Hong Kong's crypto platforms are opening bank accounts and partnering up with local banks to attract more players in the market ahead of its new licensing regime.
Hong Kong is committed to virtual assets. Its new, crypto-friendly policy has set it apart from other markets, such as the US, which has developed a seemingly anti-crypto stance, and mainland China where cryptocurrencies have been banned.
Signature Bank and SVB were attractive because they offered 24-hour service to settle cryptocurrency transactions quickly. Hong Kong's virtual banks can now attract some of this business due to their 24/7 offerings.
Smaller banks in Hong Kong may be more open to working with unlicensed crypto firms, despite the high compliance standards.
Hong Kong is now seen as a possible new hub by many crypto companies. The process is not simple and requires compliance assessments. Hong Kong is committed to virtual assets despite the challenges. The city is poised to become a major player within the crypto industry.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.