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For all of its pro-crypto initiatives Hong Kong has been struggling with banking crypto companies. A recent<a href="https://www1.hkej.com/dailynews/headline/article/3514449/%E6%81%92%E7%94%9F%E6%96%99%E8%81%AF%E5%84%B2%E5%B1%80%E3%80%8C%E4%B8%8D%E4%B9%85%E5%BE%8C%E3%80%8D%E6%B8%9B%E6%81%AF" rel="noopener noreferrer nofollow"> report</a> from the Hong Kong Economic Journal cited Lin Yansheng, Director of Commercial Banking at Hang Seng Bank, Hong Kong’s largest local bank, in outlining that the bank will accommodate crypto but that support is conditional.<h2 id="header-0">Crypto in a high rates environment</h2>Yansheng shared his insights on interest rates, stating that he believes that interest rates will rise but reassures that any increase will be temporary in nature.The Commercial Banking Director acknowledged that Hong Kong’s current high-interest rates, in contrast to those of mainland China and neighboring regions, have caused a slowdown in the overall demand for bank loans. He predicts that loan growth will face pressure this year. However, he also offers a glimmer of hope, stating that a reduction in interest rates may not be far off. He suggests that next year’s expected interest rate cuts could lead to an improvement in loan growth.Data published recently by the Hong Kong Monetary Authority (HKMA) shows that annualized loan growth has been negative since May. It currently stands at -1.1%. Yansheng explained that as borrowing rates decrease in mainland China, Hong Kong’s banking industry is experiencing a downturn in loan growth. The high Hong Kong dollar interbank offered rate (HIBOR) currently limits the volume of corporate borrowing.The rising concerns over interest rates have prompted Hang Seng Bank to acknowledge the importance of cryptocurrencies.<h2 id="header-1">Unconvincing crypto embrace</h2>The bank recently outlined the regulatory framework for virtual asset businesses seeking to operate within its purview. To open standard banking accounts, these businesses must obtain an Approval-in-Principle (AIP) license from the Securities Regulatory Commission (SRC), as per the bank’s announcement.The first issue is that obtaining an AIP license has proven to be incredibly difficult. Currently, only OSL and <a href="https://medium.com/&#64;coinness.gl/osl-prepares-for-fund-launch-following-license-approval-523d32a1a57c" rel="noopener noreferrer nofollow">HashKey</a>, two virtual asset trading platforms, have managed to obtain the required clearance. Hang Seng Bank acknowledges that it hasn’t received many inquiries about crypto-banking, attributing it to that challenging process of obtaining AIP certification. Meeting the demanding requirements for such permission poses a significant hurdle for most businesses.Getting beyond this obstacle, Yansheng clarified that even then crypto companies will only be able to obtain a “simple” bank account. He didn’t clarify what services would be excluded but Hang Seng’s embrace of crypto-related business sounds very much like it’s lacking in conviction.Both the China Securities Regulatory Commission and the Hong Kong Monetary Authority have conducted<a href="https://medium.com/&#64;coinness.gl/hong-kong-pressing-banks-to-facilitate-crypto-clients-95dbc10c9399" rel="noopener noreferrer nofollow"> roundtable meetings</a> to address the difficulties faced by virtual asset businesses. Yansheng reiterated Hang Seng’s commitment to complying with the regulators’ instructions and accommodating these companies. However, it’s clear that<a href="https://medium.com/&#64;coinness.gl/banking-difficulties-remain-in-hong-kong-for-crypto-start-ups-44d272b01fc4" rel="noopener noreferrer nofollow"> difficulties</a> remain.Last month, it was<a href="https://medium.com/&#64;coinness.gl/hang-seng-ponders-crypto-product-offering-42d035fe51d5" rel="noopener noreferrer nofollow"> reported</a> that Hang Seng Investment Management Co., a wholly-owned subsidiary of Hang Seng Bank and the largest exchange-traded fund (ETF) manager in Hong Kong, was looking to add digital assets to its product line.

Hong Kong’s Largest Bank in Lackluster Crypto Embrace

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