Hong Kong legislator Johnny Ng has called for an expansion of virtual bank services to address hurdles faced by web3 startups in the region.

Hong Kong should embrace a more crypto-friendly approach by expanding virtual banking services as web3 startups face ongoing hurdles in accessing financial services, Johnny Ng, a member of the Legislative Council of Hong Kong, said in an X post on Aug. 9.

香港金融管理局早前發表虛擬銀行報告。我對於過去特區政府幾年支持銀行業服務升級和虛擬銀行發展表示讚賞，但同時我的團隊做了一個關於Web3公司對香港銀行服務的意見，調查表示，Web3公司出現開户難情況，導致不能有效地發展業務。因此，我今天記者會提出：1.… pic.twitter.com/srDiDOhvwC

— Johnny Ng 吴杰庄 (@Johnny_nkc) August 9, 2024

Ng emphasized the need for virtual banks to diversify their services and proposed the establishment of dedicated crypto-focused banks, referring to a report by the Hong Kong Monetary Authority that highlighted ongoing difficulties web3 companies encounter when attempting to open bank accounts in the region. “The survey showed that web3 firms had difficulties in opening accounts, resulting in inefficiency in developing business locally,” Ng said.

Per Ng’s proposals, virtual banks should focus more on the needs of web3 companies and accelerate the development of Hong Kong’s digital ecosystem, stating that “virtual asset policies have become the focus of global government discussions.”

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Web3 firms struggle with banking challenges in Hong Kong

Web3 startups in Hong Kong have encountered challenges with opening bank accounts due to stringent regulatory requirements and the conservative approach of traditional financial institutions toward the crypto space.

According to the HKMA’s report, out of over 120 web3 firms that established their presence in Hong Kong in 2022, around 95% faced difficulties opening accounts with virtual banks. Moreover, 70% of these companies were required to have shareholders or directors visit Hong Kong multiple times, while 60% were asked to maintain fixed deposits. Additionally, 54% of the firms took six months or more to open an account, with nearly 20% taking between two to five months, and 3% were refused altogether.

Ng urges Hong Kong’s authorities to advance their efforts focused on web3 adoption, saying that if the city wants to become the web3 center, it should “promote the development of the entire chain and ecosystem as soon as possible.”

Read more: Hong Kong busts $190m crypto money laundering ring: report