Hong Kong Regulators Encourage Banks Not to Fear

Despite the regulatory crackdown on the crypto industry in the U.S., Hong Kong‘s banking regulator, the Hong Kong Monetary Authority (HKMA), is exerting pressure on HSBC, Standard Chartered, and Bank of China to accept crypto exchanges as clients. These banks hold a special position as the city’s currency issuers.

Hong Kong Regulators Encourage Banks Not to Fear

The HKMA questioned the banks about their reluctance to accept crypto exchanges as clients at a meeting in May, according to persons familiar with the situation, the Financial Times said. The HKMA underlined in a letter dated April 27 that due diligence on potential clients shouldn’t result in unreasonable restrictions, especially for companies establishing an office in Hong Kong to search for prospects here.

On the same day, the watchdog’s deputy chief executive, Arthur Yuen, wrote on his blog that the agency anticipates “regulated virtual asset service providers (VASPs) will be able to successfully apply for a bank account through a reasonable process.” According to a Bloomberg story, the HKMA also stated that banks should assist regulated crypto companies with “their legitimate need for bank accounts.” 

Hong Kong Faces Difficulties

The HKMA‘s call for banks to support cryptocurrency exchanges shows the difficulties Hong Kong faces in trying to restore itself as a major worldwide center for the cryptocurrency sector. Hong Kong has a long history as a center for the cryptocurrency industry.

Beijing’s crypto crackdown hurt Hong Kong’s position, but the administration has said it wants to provide a favorable climate for companies that deal in digital assets. In an effort to draw more crypto firms to the city, the government is introducing a new licensing system for cryptocurrency platforms this month.

Hong Kong Enthusiastic Despite All Challenges

Hong Kong continues to be passionate about the industry despite high-profile disasters like the demise of FTX, which formerly had its headquarters in the city. Banks do not forbid customers from using cryptocurrency. Senior bank executives who have a traditional banking attitude and are concerned about being prosecuted for alleged unlawful activities, however, are resistant.