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Regulatory Limitations May Influence OTC Crypto Retailers’ Existence In Hong Kong

Hong Kong, one of the world’s most influential financial hubs, has helped shape the growth of cryptocurrencies. For example, the crypto futures exchange FTX and the virtual currency platform Crypto.com both originated in China.

As millions of dollars are transacted daily on Hong Kong-based crypto exchanges, the “Vertical City” also has an abundance of real over-the-counter crypto stores. Henri Arslanian, PwC crypto expert and former head of the Hong Kong Fintech Association, told reporters that Hong Kong has the most conventional OTC crypto brokers. “These are small shops,” he remarked. In addition, an unnamed insider said he noticed a large increase in OTC crypto exchanges, some of which even had Bitcoin ATMs.

Hong Kong’s Cryptocurrency Industry Is OTC Commerce

Unlike in the US or Europe, where people may readily buy and sell cryptocurrency on trading platforms, Hong Kong’s crypto stores are a unique feature. Kelvin Yeung, HKD’s founder, clarified. Yeung told reporters that the HKD crypto trade was launched in 2019 and that it started trading in January.

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According to Yeung, HKD’s shop is similar to a bank in that it allows customers to buy crypto and receive personal guidance. “Yeung says the presence of HKD enhances client trust.”Our users are generally 40-70. We decided to build a market for females because we want to encourage the idea that women can be independently wealthy and exercise self-investment,” said Priscilla Ng, creator of Coiner HK. Priscilla Ng also underlined CoinerHK’s two physical outlets in the golden zone.

Authorities May Drive Out OTC Exchanges

In addition to growing access to crypto in Hong Kong, physical OTC crypto exchanges like HKD and CoinerHK face regulatory issues. Due to China’s crypto restrictions, this is appealing to Chinese tourists: “It’s logical to assume mainland Chinese visitors will buy crypto in these OTC shops.” Arslanian expects Hong Kong’s consumer OTC services to grow because of the influx of Chinese visitors intrigued by crypto.

Future cryptocurrency exchange laws in Hong Kong may cause these shops to close, Arslanian said. The Financial Regulation and Treasury Department may restrict crypto access to $1 million in holdings. Nearly 93 % of the city’s inhabitants will be denied crypto access. “This will substantially harm our business,” says HKD. The only legal cryptocurrency exchange in Hong Kong right now is OSL, owned by Fidelity’s BC division.

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Business Needs Individual Investors

However, Arslanian points out that individual users who purchase and sell crypto on exchanges often produce a lot of income, which draws institutional clients. So, forcing crypto exchanges to only cater to large investors is a difficult task from a business viewpoint. Regardless, Walton stated that OSL has witnessed a considerable increase in corporate interest over the last year. Given the ongoing regulatory uncertainties surrounding cryptocurrencies, Arslanian suggests Hong Kong for large investors and Singapore for retail clients.

Shelly Melancon (Switzerland)

Shelly is a cryptocurrency enthusiast from Switzerland, she bought her first crypto in 2015 when it was way less popular then it is today and since 2017 she has been writing about cryptocurrency for online news portals. Shelly is the newest addition to the Tokenhell team, she writes mostly news and reviews related articles , stay tuned to her posts to stay up to date with the crypto world.

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