As US regulators crack down on the industry, Hong Kong banking regulators are pressuring financial firms such as HSBC and Standard Chartered to take on cryptocurrency exchanges as clients.
At a meeting last month, the Hong Kong Monetary Authority asked UK-based financial firms and the Bank of China why they would not accept cryptocurrency exchanges as customers, according to three people familiar with the matter.
In an April 27 letter obtained by the Financial Times, the Hong Kong Bankers Association said due diligence on potential clients “should not create an undue burden”, particularly that it “has an office in Hong Kong. For companies looking for opportunities in
Banks are not banning cryptocurrency customers, but are reluctant to do business with exchanges over concerns that they could face prosecution if their platforms are used for money laundering or other illegal activities. .
The pressure highlights the difficulties created by Hong Kong’s efforts to establish itself as a global hub for the cryptocurrency industry despite a series of high-profile and damaging bankruptcies, including the implosion of FTX. I have to.
“The HKMA encouraged banks not to be afraid,” said a person familiar with the discussion. “There is some resistance from the traditional banking mindset .
Earlier this month, the U.S. Securities and Exchange Commission sued the world’s largest cryptocurrency exchanges Binance and Coinbase for violating U.S. securities laws.
However, in a sign of Hong Kong’s enthusiasm for the space, pro-China lawmaker Johnny Ng, who is also a member of China’s top political advisory board, has announced that he will move Coinbase and other crypto exchanges to Hong Kong in the wake of the SEC lawsuit. invited to establish in
An executive briefed on a meeting with banks said they were “encouraged to support cryptocurrencies and exchanges while facing a fine line between being aware of the situation in the United States.”
An executive at one of the financial firms said, “If it’s a policy of the Hong Kong government, I want to ensure the development of the industry,” and said, “I’m not assigned duties related to anti-money laundering and prevention of personal information leakage. Is it?”, he said. -Customer’ issue.
Jonathan Crompton, partner at Hong Kong-based law firm RPC, said: “HKMA and SFC [Securities and Futures Commission] They are pretty vocal about their expectations. Crompton added that the HKMA’s position is “unusual” compared to other regulators around the world who are “more skeptical about cryptocurrencies.”
Hong Kong has a history as a cryptocurrency hub. It was the home of Sam Bankman-Fried’s FTX exchange, which is now defunct and has moved to the Bahamas, where stablecoin Tether and digital asset exchange Crypto.com are located. launched in the region.
Although its status has declined following the Chinese government’s crackdown on cryptocurrencies that began in 2017, it has indicated its intention to reestablish itself as an industry hub. The government said in October that it wanted to provide a “promoting environment” for digital asset groups.
HSBC, Standard Chartered and Bank of China have a special role as issuers of municipal currency in Hong Kong, holding the posts of Chairman and two Vice-Chairs of the Hong Kong Bankers Association Lobby Group.
Standard Chartered said it had “regular dialogue with regulators on a variety of subjects”, and HSBC said it was “very committed to the policies and developments of this nascent industry in Hong Kong”. Bank of China declined to comment.
Hong Kong introduced a new licensing regime for cryptocurrency platforms this month to attract more cryptocurrency groups to Hong Kong.
“Everything has been done by the government to encourage these banks to open up banking services to this sector,” said Neil Tan, chairman of the Hong Kong Fintech Association.
Additional report by Cheng Leng
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