Hong Kong’s Largest Bank To Support Crypto, But There’s A Catch

Coingapestaff
July 31, 2023 Updated December 27, 2023
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The global market is attentively tuned in to the US Federal Reserve’s interest rate meeting this week, with anticipation high for a potential interest rate increase. Lin Yansheng, Director of Commercial Banking at Hang Seng Bank, the largest local bank in Hong Kong, discusses these expectations. He predicts that the interest rates will rise but adds that the increase will only be temporary.

And because of the rising concerns, the bank acknowledges the need for crypto. The bank has outlined the rules by which virtual asset businesses must operate. These businesses can open standard banking accounts once they obtain an Approval-in-Principle (AIP) license from the Securities Regulatory Commission, according to the bank’s announcement.

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More Interest Rate Hikes

Yansheng acknowledges that Hong Kong’s current high-interest rates, in contrast to those of the mainland and neighboring regions, have triggered a slowdown in the overall demand for bank loans. He anticipates that loan growth will face pressure this year. However, he also offers a glimmer of hope, stating, “It will not wait long before reducing it.” He indicates that next year’s expected interest rate cuts could prompt an improvement in loan growth.

The Hong Kong Monetary Authority’s latest statistics reveal that annualized loan growth has been negative since May, currently at -1.1%. Yansheng claims that as borrowing rates decrease in the mainland, Hong Kong’s banking industry will witness a downturn in loan growth. The high Hong Kong dollar interbank offered rate (HIBOR) currently suppresses the volume of corporate borrowing.

Despite the high-interest environment, Yansheng expects the Fed will raise rates only one more time and maintain this level for several months. His predictions suggest a cut in interest rates next year, encouraged by the slowdown of US inflation to 3% in June.

In terms of trade financing, Yansheng notes that high-interest rates have led to trade financing being managed by neighboring regions, with some companies even shifting to Southeast Asia due to pressures on the mainland’s manufacturing industry.

Also Read: FTX Founder Bankman-Fried Might Face Pre-Trial Jail Time As Prosecutors Cite Intimidation Tactics

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Time To Eye Digital Assets?

Regarding the growth of virtual assets, roundtable meetings have been held by the China Securities Regulatory Commission and the Hong Kong Monetary Authority to explore the difficulties faced by virtual property businesses. Yansheng reaffirms Hang Seng’s dedication to heeding the regulator’s instructions and accommodating these companies.

Only OSL and Hashkey, two virtual asset trading platforms, have so far been able to obtain this clearance. Due to the difficult procedure of receiving AIP certification, Hang Seng Bank says that they haven’t received many inquiries about this matter. It means that receiving such permission calls for meeting demanding requirements, making it challenging for most businesses.

Also Read: Binance Becomes First Crypto Exchange To Get Major License In Dubai

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.