Hong Kong, one of the world’s leading financial centers, has played a huge role in the development of cryptocurrencies. For example, in China today, some of the most successful and successful cryptographic companies have been created, including the FTX cryptocurrency derivative exchange, as well as the Crypto.com digital real estate platform.
But since trillions of dollars are regularly traded through Hong Kong cryptocurrency exchanges, there are also many physical OTC cryptocurrency stores in the “vertical city”. Henri Arslanian, president of PwC Crypto and former president of the Hong Kong Financial Technology Association, told the Cointelegraph that the number of traditional OTC crypto brokers in Hong Kong definitely stands out. “These are literally ordinary shops for the public,” he said.
An anonymous source told the Cointelegraph that while traveling around Hong Kong, he could not help but notice the increase in cryptocurrency exchanges, some of which even provide access to cryptocurrency ATMs.
Photo of an OTC store in Hong Kong taken by an anonymous observer.
OTC stores shape Hong Kong’s cryptocurrency
Compared to regions such as the United States or Europe, where buying and selling cryptocurrencies on regulated exchanges is fairly simple, Hong Kong’s physical cryptocurrency exhibits are a unique brand that give people a different way to access cryptocurrencies.
Calvin Young, CEO and founder of the Hong Kong Digital Asset Exchange, has drawn attention to this issue. Jung told Cointelegraph that the HKD cryptocurrency exchange was founded in 2019, that the physical store opened in January this year, and that they employ over 30 employees to serve customers.
Image source: HKD
Young further notes that the HKD store works in the same way as a traditional bank, and gives customers a practical approach to buying cryptocurrencies as well as gaining access to personalized advisory services. As such, he believes that retail stores are likely to become a global trend when cryptocurrency becomes mainstream:
“As more and more institutional investors and investors enter the industry and digital currency becomes mainstream, there will be a trend towards physical store openings combined with online platforms.”
Young added that he believes more customer trust is created between HKD and the user base due to its physical presence. He noted: “Our users are mostly between 40 and 70 years old. An older customer base is important for regular adoption, as many of these people still have fiat currencies and only rely on traditional financial systems.”
Interestingly, it is not just the older generation who buy cryptocurrency in these physical places. Priscilla Ng, founder of Coiner HK, another Hong Kong-based OTC exchange, told Cointelegraph that CoinerHK was launched in early 2020 to focus on the women’s market: “We wanted to create a market for women because we wanted to promote the idea that Women can be financially independent and self-investing. “.
Thus, Ng shared that CoinerHK’s customers are mostly women between the ages of 20 and 50, and around 70% of them exchange cash for cryptocurrency. Ng also noted that CoinerHK has two physical stores in Hong Kong’s Golden District.
Image source: CoinerHK
Echoing Yeung, Ng added that having physical OTC exchanges can give customers more options: “We treat them as friends when they shop and also give our customers confidence because we have physical locations.” Ng also noted that the CoinerHK Wanchai website also acts as a non-perishable token (NFT) art gallery.
Rules can push for physical OTC exchange
While physical over-the-counter cryptocurrency exchanges such as HKD and CoinerHK appear to provide broader access to crypto in Hong Kong, there are a number of regulatory risks associated with this type of institution.
For example, Arslanyan explained that in addition to regular customers, these establishments were the destination for tourists from mainland China. He noted that many of these stores are located in tourist areas to attract users, but are particularly attractive to Chinese tourists due to the cryptocurrency ban in China: “It can be assumed that if tourists from mainland China visit Hong Kong, nothing will stop them from buy … “Crypto in these over-the-counter stores.”
With this in mind, Arslanyan believes that the number of OTC shopping malls in Hong Kong may increase due to the influx of Chinese tourists interested in buying cryptocurrencies. On the other hand, Arslanyan mentioned that the forthcoming regulatory framework for cryptocurrency exchange in Hong Kong could lead to the complete closure of these stores.