Hong Kong Banks Turn Backs on Bitcoin

Hong Kong Bitcoin firms are forced to look elsewhere for their banking needs.

Gatecoin, a Hong Kong cryptocurrency exchange, was informed by its bank that is account was suspended, according to a local media report.

A Hang Seng Bank representative made the call on the 15th of September, without notice or a detailed explanation. Gatecoin’s backup account at Fubon Bank was also effectively shut down via a daily transaction limit which was “significantly below their needs”, the South China Morning Post reported today.

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The move caused obvious consternation for Gatecoin and its customers. Thomas Glucksmann, Head of Marketing at Gatecoin, said: “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.”

While Bitcoin does not in itself exist through the traditional banking system, Hong Kong residents that wish to purchase the currency need to do so through a local bank account. Hang Seng was also the venue at which Bitcoin holders would exchange digital currency for fiat.

Gatecoin does not accept money via cash or cheque. In this way it is able to keep track of its customers, but this system makes it reliant on the banking system. Upon receiving the news from the bank, the exchange sent an email to customers informing them that all transfers were temporarily suspended. Alarmed, some phoned the police, fearing another Mt. Gox.

As a result of this freeze, Hong Kong Bitcoin firms have been forced to open bank accounts overseas to continue operations.

In September, the Hong Kong financial regulator released a statement reminding the financial community that despite their popularity and decentralised nature, ICOs are in fact still subject to the law.

The Securities and Futures Commission made the statement the day after ICOs were completely banned on the Chinese mainland.

The SFC’s approach to the startup craze was far more measured – it simply noted that at least some ICO projects fall under securities laws, and as such require a license, no matter where they are located.

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