Bitcoin Eyes Demand As Hong Kong Protestors Announce Bank Run (#GotBitcoin?)
Bitcoin Is Hoping To Become A Hot Property In Hong Kong.Bitcoin Eyes Demand As Hong Kong Protestors Announce Bank Run (#GotBitcoin?)
The region’s political crisis has swept over its banking sector, which is now seeing protestors withdrawing large bundles of cash out of ATMs.
The move is the latest tactic to reduce People’s Bank of China’s influence on the Hong Kong economy. Protestors have warned that they would withdraw as much Hong Kong dollars (HKG) as they can. They would further exchange their cash holdings for the US dollar as a strategy to protect their assets and to show the Chinese government that they are in full control.
Cryptocurrency evangelists believe the disturbing scenario could fuel bitcoin’s demand in Hong Kong. Influential Twitterati Rhythm Trader said on Wednesday that protestors would eventually want to park their cash in non-sovereign assets like bitcoin.
HK$70 Million Out of Chinese Banks, Already
The Hong Kong student who launched the “peaceful protest” claimed that protestors have already withdrawn more than HK$70 million. Meanwhile, many participants shared their withdrawal receipts on a Telegram channel dedicated to Hong Kong protests, which has over 1,500 members already.
“This may work because Carrie Lam and the PRC care much about the economy,” the Hong Kong student told Insider, adding that he and others like him would stop if the Chinese government fulfills their five demands. They are:
“Completely withdraw the extradition bill; retract the proclamation that the protests were riots; withdraw criminal charges against all protesters; thoroughly investigate abuse of powers by the police; dissolve the Legislative Council by administrative order, and immediately implement dual universal suffrage.”
LIHKG, a Chinese version of social media platform Reddit, saw mounting discussions about the proposed Hong Kong bank run. One of the posts, written by an activist, discussed how the Hong Kong dollars would continue to remain pegged to the US dollar this year. But eventually, a more massive capital outflow would disturb the balance between the two currencies, damaging the HKG.
“If you want to protect yourself, you must first convert most of the assets … in order to maintain value in US dollars or other reliable foreign currency,” the post read.
Bitcoin Trading Up
Chinese banks are likely to push their ATMs out of order to circumvent the protestors’ withdrawal requests. The state could also seize the cash upon arresting its holder on a typical suspicion of causing riots. That has left Hong Kong protestors with a few options to safeguard their money from the police, which is bitcoin.
A portion of money already out of the banking system has landed itself in the emerging cryptocurrency markets, according to LocalBitcoins.com. The peer-to-peer crypto marketplace noted a spike in trading volume coming from the Hong Kong region. Within a few weeks, the volume surged from HK$3 million to HK$6 million. That sparked rumors that Hong Kong wealthies were tunneling their capital offshore by using Bitcoin’s decentralized asset-transfer infrastructure.
The bitcoin trend is hoping to leak down to everyday citizens as they participate in the bank run. Nevertheless, there is no evidence that could prove that they would.
Earlier this month Hong Kong protest leader urged protesters to attack banks by withdrawing their all funds at the same time. This move caused many businesses in the city to turn to bitcoin and other cryptocurrencies. Anti-extradition protests have been going in the city for more than three months now.
Hong Kong departmental store chain Pricerite became the latest business to start accepting payments in bitcoins and other cryptocurrencies. In a Facebook post, the store announced that they have begun accepting bitcoin, Litecoin, and Ethereum.
Use of cryptocurrencies has also benefited the protesters in escaping government surveillance and prepare for further economic turmoil in the city. The main of the bak run was to target Chinese banks. If all people decide to withdraw their funds at the same time, it could cause banks to stop functioning as most of the banks operate using the fractional reserve. However, hong Kong National Party leader Chen Haotian urged people to attack all banks as Chinese banks can also borrow funds from other banks.
Pricerite store is known for supporting the protests by providing different supplies to protestors, including water bottles, umbrellas, and other essential things. As protest escalates and the economy suffers, we can expect more and more businesses to accept cryptocurrencies.
Hong Kong’s SFC Releases Regulations For Crypto Fund Managers
Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), has officially released regulations for crypto fund managers. The SFC published the regulatory circular on its website on Oct. 4.
In the 37-page document titled “Proforma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets,” the SFC provided terms and conditions for corporations managing portfolios that invest in virtual assets.
Organization And Management Structure
According to the document, virtual asset fund managers in Hong Kong should always maintain liquid capital of a minimum of 3 million Hong Kong dollars ($383,000) and its variable required liquid capital.
The SFC advised managers to have sufficient human and technical resources for the proper performance of duties as well as to adopt risk management and compliance policies, as well as policies for Anti-Money Laundering and Combating the Financing of Terrorism.
In order to ensure the safety of fund assets, the SFC also requires crypto fund managers to appoint a functionally independent custodian. The regulator emphasized that a virtual asset fund manager should ensure its fund assets are segregated from its own assets, as well as assets of other clients, unless fund assets are held in an omnibus client account.
If a manager receives fiat currency on behalf of the fund, one or more segregated bank accounts should be set up for holding clients’ money, the SFC stated. Bank accounts should be established and maintained with an authorized financial institution in Hong Kong or a bank in a jurisdiction agreed to by the SFC, the document notes.
Additionally, the virtual asset fund manager should evaluate the features of diverse custodial arrangement, including hardware and software infrastructure, security controls over key generation, storage, management and transaction as well as the process of handling blockchain forks, the agency stated.
As reported, Hong Kong has established itself as one of the most progressive jurisdictions for cryptocurrencies and blockchain, as the country is one of the leading countries according to the number of registered digital currency exchanges. Earlier this year, the SFC issued guidance on security token offerings, intending to bring more clarity about the legal and regulatory requirements for the market.
Non-Seizability of Bitcoin Very Attractive For Hong Kong: Pompliano
Bitcoin’s (BTC) use as a protector of wealth is coming to the fore in Hong Kong as trading volumes spike and businesses iron out problems with acceptance.
Trading record underscores Bitcoin’s “non-seizability”
As multiple commentators including Morgan Creek Digital co-founder Anthony Pompliano noted this week, Bitcoin is a genuine solution for Hong Kong residents worried about monetary sovereignty.
“When you’re worried about your assets being seized or becoming inaccessible to you, Bitcoin’s non-seizability becomes very attractive. This aspect of Bitcoin just became important for 1+ billion people in India & Hong Kong,” he tweeted on Oct. 6.
Pompliano was writing days after China’s 70th state anniversary protests, as big as any in the democracy movement’s 18-week history, were met with a forceful reaction from the government.
In the face of a crackdown on civil liberties via emergency powers, monetary freedom also took a hit, with worried residents forming queues at ATMs.
Hong Kong saw a giant spike in trading on P2P Bitcoin exchange Localbitcoins, seeing 12.3 million HKD ($1.57 million) change hands in the week ending Sept. 28.
Hong Kong Free Press Escapes ‘Clutches of BitPay’ — Switches to BTCPay
Local entities eyeing possibilities for escaping the grip of authorities had already considered Bitcoin, but it was the teething problems that hit the headlines.
As Cointelegraph reported, the Hong Kong Free Press (HKFP) had complained about payment processor BitPay failing to pass on donations to its cause.
BitPay blamed the banking system, sparking a debate about the irony of relying on fiat via third parties in order to use Bitcoin.
As of Oct. 10, however, the HKFP had resolved the issue, founder Tom Grundy revealed — by switching to open-source alternative BTCPay.
“HKFP has escaped the clutches of BitPay and… now accepts Bitcoin again via BTCPay,” he confirmed.