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.
Staff at Hong Kong-based cryptocurrency exchange Gatecoin – which allow customers to exchange their digital money for fiat currency – were left perplexed after they received a phone call from a Hang Seng Bank representative on September 15, where they held a company bank account, and were told their account was suspended without a detailed explanation.
“It was a major disruption to our business,” Gatecoin marketing head Thomas Glucksmann said.
“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 the company has had its accounts frozen with other banks before, this was first time it was suspended without prior notice, he added.
Soon after, Gatecoin’s backup account with Fubon Bank was imposed with a daily transaction limit that was significantly below their needs, effectively shutting down the account.
One of bitcoin’s mission statements is to depart from the traditional banking system. But ironically, without a local bank account, new bitcoin buyers cannot purchase the digital currency.
Glucksmann said the company strived to be “the most anti-money-laundering (AML) compliant, strict and transparent exchange”with its banking partners, only for their efforts to be fruitless.
“We’ve been very much in favour of enforcing strict AML best practices; we do a lot of client due diligence and we don’t accept cash or cheques, because we have always wanted to make sure that we can associate every bank transfer coming in and out with the name of the client that has registered with us and we have all their [‘know your customer’ (KYC)] information,” Glucksmann said.
“This way our banking partners feel satisfied that we’re able to provide [information] for their KYC and AML teams.”
Without a banking solution for its customers, Gatecoin sent an email telling them that transfers were suspended until they could find a way forward.
Source/More: Hong Kong’s bitcoin businesses suffer after local bank accounts frozen | South China Morning Post