Hong Kong is filled with OTC crypto stores, but rules may limit their existence. In Hong Kong, brick-and-mortar crypto exchanges are prevalent. But there are concerns about unknown laws that might completely dismantle these businesses.
Hong Kong is filled as one of the world’s most important and influential financial cities. It has played a vital role in the development of cryptocurrencies. For example, the Chinese territory has given birth to some of the most well-known. And successful crypto enterprises to date, such as FTX, a crypto derivatives exchange, and Crypto.com, a digital asset platform.
Despite the fact that Hong Kong’s crypto exchanges handle trillions of dollars on a daily basis. The “Vertical City” also has a plethora of actual over-the-counter crypto businesses. According to Henri Arslanian, a PwC crypto lead and former chairman of the Hong Kong Fintech Association. The number of traditional OTC crypto brokers in Hong Kong stands out. He explained, “These are literally physical and mortar establishments for the general population.”
Furthermore, an unnamed source told Cointelegraph that when driving around Hong Kong is filled. He couldn’t help but notice a significant increase in OTC crypto exchanges. Some of which even offer access to cryptocurrency ATMs.
Hong Kong’s Crypto Culture is Made up of OTC Retail Outlets
Compared to regions such as the United States or Europe, where buying and selling cryptocurrency on regulated exchanges is relatively simple. Hong Kong’s actual crypto stores are a unique brand that gives people another method to access bitcoin.
Kelvin Yeung, the CEO and founder of the Hong Kong Digital Asset Exchange, or HKD, clarified the situation. According to Yeung, the HKD crypto exchange launched in 2019, but the actual shop opened in January of this year. And the company employs over 30 people to provide customer care.
HKD’s shop, according to Yeung, functions similarly to a typical bank. Which allows consumers to get a hands-on approach to buying cryptocurrency as well as access to in-person advisory services. As a result, he predicts that as crypto becomes more mainstream, retail shops will become a global trend.
“As more investors and institutional investors enter the business and digital currency becomes more mainstream. Physical storefronts will opened in tandem with online platforms.”
The actual presence of HKD, according to Yeung, builds client trust. “Our users mostly aged 40 to 70. Because many older customers still use fiat currency and only trust established financial institutions. An older client base is critical for widespread adoption.
Strangely, it’s not simply the elderly generation buying bitcoin here. Priscilla Ng, founder of Coiner HK. Told Cointelegraph that Coiner HK created in early 2020 to target the female market.
As a result, Ng revealed that CoinerHK’s customers mostly women aged 20 to 50. With roughly 70% exchanging cash for bitcoin. Ng also emphasized CoinerHK’s two physical stores in Hong Kong’s golden region.
Regulations may Drive out OTC Exchanges
While physical OTC crypto exchanges like HKD and CoinerHK look to be increasing access to crypto in Hong Kong. They also pose regulatory problems.
For example, Arslanian stated that in addition to regular customers, these businesses have targeted Chinese visitors. “One may presume that if mainland Chinese tourists visit Hong Kong. Nothing will prohibit them from buying crypto at these OTC shops, “he said.
Due to the inflow of Chinese tourists interested in buying crypto. Arslanian believes retail OTC facilities may increase in Hong Kong. However, Arslanian stated that Hong Kong’s future crypto exchange regulations may force these shops to close.
Hong Kong’s Financial Services and Treasury Bureau is considering limiting crypto access to portfolios. It is worth $1 million or more. The new rules will deny crypto access to nearly 93 percent of the city’s residents.
While this is a huge challenge for physical OTC businesses, Arslanian believes they may simply shift underground. “If something goes wrong, the public is less inclined to report them to the authorities,” he said.
The greatest regulatory problem now confronting HKD is determining if Hong Kong will soon only allow institutional investors. To invest in crypto: “This will greatly affect our business.” Arslanian noted that the crypto community opposes regulated crypto exchanges not being allowed to service retail consumers. Since this could lead them to unregulated platforms.
Unfortunately, Arslanian noted that even if completely regulated. Physical OTC businesses would struggle to obtain the necessary licenses. The exchange currently simply requires a valid ID and address verification to buy or sell crypto.