The Hong Kong Financial Authority (HKMA) is encouraging banking giants to just accept crypto exchanges as shoppers, the Monetary Instances reported on June 15.
Whereas no restrictions maintain Hong Kong banks again from accepting crypto shoppers, banks are cautious of drawing regulatory scrutiny in case their shoppers are discovered ed in any felony actions, the report mentioned. The implosion of FTX and the alleged mishandling of its shopper funds have solely made banks extra cautious.
Beneath the circumstances, HKMA is attempting to encourage banks to tackle crypto shoppers to additional its goal of turning Hong Kong into a worldwide crypto hub.
The regulator additionally informed banks in a letter on April 27 that the due diligence procedures of the banks shouldn’t impose an “undue burden” on crypto companies searching for to determine a base in Hong Kong.
Niel Tan, chair of the FinTech Affiliation of Hong Kong, mentioned:
“Every thing has been executed on the federal government’s aspect to encourage these banks to facilitate the opening of banking companies to the sector.”
Consistent with its goal of offering clear rules, Hong Kong launched a brand new licensing regime for crypto exchanges providing companies to retail traders on June 1. The HKMA can also be trying to introduce complete guidelines for stablecoins over the subsequent 18 months.
Moreover, exchanges within the U.S. are trying to find extra crypto-friendly locations as they face elevated regulatory scrutiny, with Hong Kong vying for the enterprise. Simply final week, after the U.S. Securities and Alternate Fee (SEC) sued Binance and Coinbase, pro-Beijing lawmaker Johnny Ng invited Coinbase and different exchanges to arrange places of work in Hong Kong.
Banks stay cautious of crypto companies.
Throughout a gathering final month, the HKMA raised inquiries with HSBC, Normal Chartered, and the Financial institution of China relating to their reluctance to onboard crypto companies as shoppers; three undisclosed sources informed FT.
An unnamed supply acquainted with the dialogue informed FT that HKMA “inspired the banks to not be afraid.” However the supply added:
“There’s resistance from a standard banking mindset . . . we’re seeing some resistance from senior executives at conventional banks.”
As per the report, banks are attempting to stay open to encouragement from the regulator to help crypto exchanges. On the identical time, nonetheless, they’re keeping track of the developments of the regulatory proceedings within the U.S.
The banks need to help the event of the crypto trade in step with Hong Kong authorities coverage. However they’re involved about getting in scorching water with the regulators in case of anti-money laundering or know-your-customer points with the crypto exchanges.
