According to a Chinese media outlet, the popular Hong Kong-based cryptocurrency exchange platform, Gatecoin, has recently been informed by their banking services provider that their account has been suspended.
The South China Morning Post stated that the decision to shut down Gatecoin’s account was made by Hang Seng Bank officials, without notifying Gatecoin. Hang Seng Bank also declined to explain their decision. Also, Gatecoin’s secondary account at Fubon Bank was shut down. According to Fubon Bank, their account was shut down due to their transaction limit, which did not meet their requirements.
This decision has hugely affected both Gatecoin and its users. According to Gatecoin’s head of marketing, Thomas Glucksmann, the decision has caused severe disruption to Gatecoin’s business. Glucksmann noted the curious timing of the decision, since Gatecoin recently increased its clientele three-fold, and Bitcoin trading has just picked up, due to the cryptocurrency’s increase in price.
Bitcoin’s decentralized nature means that the cryptocurrency is not reliant upon banks, unlike fiat currency. However, Hong Kong policies require that all Hong Kong-based citizens can only buy Bitcoin and other cryptocurrencies using their legitimate and local bank accounts. Hang Seng Bank was one of the most popular options amongst users to exchange cryptocurrency for fiat currency.
Currently, Gatecoin refuses cash or cheque purchases to remain compliant with policies. However, this means that Gatecoin is dependent on efficient banking to continue its business operation. After discovering that their bank accounts had been suspended, they notified their users via email and stated that transactions were temporarily unavailable. This caused panic in several users, and some even phoned the police, as they feared Gatecoin could be in the process of collapse.
Following their account suspension, all Hong Kong-based cryptocurrency exchanges had to open up bank accounts on foreign shores to continue conducting business.
Two months ago, the Hong Kong finance regulating body issued statement which served to remind the Hong Kong community that ICOs and cryptocurrency are still required to comply with policies and regulation, despite their rising popularity.
This statement was issued a mere day following China’s ban on ICOs.
Unlike Gatecoin’s sudden troubles, the Securities and Futures Commission (SFC) approached the ICO sector with caution. According to the SFC, ICOs are subject to securities laws, which require any ICO to obtain a license, regardless of their location.