According to the Financial Times, Hong Kong regulator pushes HSBC and Standard Chartered to onboard Crypto Exchanges.
Key Factors:
- HKMA urges HSBC and Standard Chartered to onboard crypto exchange clients.
- HKMA emphasizes streamlined due diligence for potential customers, especially for those establishing offices in Hong Kong.
- Banks seek to dissuade customers from participating in cryptocurrency trading.
Last month, the Hong Kong Monetary Authority (HKMA) questioned UK-based lenders, including the Bank of China, regarding their reluctance to accept crypto exchanges as clients, as reported. While banks in Hong Kong do not have a ban on customers using cryptocurrencies, they are hesitant to engage with exchanges due to concerns about potential money laundering or illicit activities. The banks fear potential prosecution if the platforms they associate with are involved in illegal practices.
Also Read: Hong Kong Regulator Considers Permissioned Blockchain for e-HKD, Private Banks to Implement
According to the Financial Times, the Hong Kong Monetary Authority (HKMA) issued a letter to lenders on April 27, stating that due diligence on potential customers should not impose excessive burdens, particularly for those establishing offices in Hong Kong.
While countries like the U.S. are intensifying regulatory measures on cryptocurrency exchanges, Hong Kong is encouraging banks to embrace cryptocurrency customers. Recently, the U.S. subsidiary of Binance halted dollar deposits following a petition by the Securities and Exchange Commission to freeze its assets.
Regulators in Hong Kong are urging banks to offer services to virtual asset companies as part of their efforts to establish the city as a cryptocurrency industry hub. While regulators have halted the requirement for banks to directly trade cryptocurrencies like Bitcoin, they are requesting banks to enable crypto-related businesses to open accounts for regular operations, such as paying wages and rent. This move aims to facilitate smoother business transactions within the crypto industry.
Regarding accounts associated with assets belonging to customers of crypto companies, banks are instructed to adopt a more “risk-based approach” when assessing such applications. This approach necessitates a thorough evaluation considering the potential risks involved in handling these accounts. The intention is to ensure appropriate measures are taken to mitigate any potential risks associated with the assets held on behalf of crypto company customers.
In a meeting with banks, the Hong Kong Monetary Authority (HKMA) emphasized that conducting business with crypto companies is not illegal in Hong Kong. This stands in contrast to mainland China, where transactions involving cryptocurrencies have been banned since September 2021. The reminder serves to clarify the legal landscape in Hong Kong, highlighting that banks are not prohibited from engaging with crypto-related businesses, unlike their counterparts in mainland China.
Also Read: Hong Kong Fosters Web3 and Regulates Stablecoins: Crypto Industry Milestone
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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