Hong Kong’s banking regulator is applying pressure on major lenders such as HSBC and Standard Chartered to embrace cryptocurrency exchanges as clients, despite increasing scrutiny from US regulators, according to a report.
The Hong Kong Monetary Authority (HKMA) reportedly questioned these UK-based banks, as well as the Bank of China, in a recent meeting about their reluctance to accept exchanges as clients.
The HKMA emphasized that due diligence on potential customers should not pose an undue burden, especially for those seeking opportunities in Hong Kong’s crypto industry.
Challenges Amid Hong Kong’s Ambition To Become A Crypto Hub
While banks in Hong Kong have not imposed a ban on crypto clients, their hesitancy stems from concerns over potential legal repercussions if these platforms are involved in money laundering or illicit activities.
This pressure from the HKMA highlights the challenges faced by Hong Kong as it endeavors to establish itself as a global center for the crypto industry, despite past incidents of collapses, such as the implosion of FTX.
According to insiders, the HKMA encouraged banks to overcome their apprehensions and not be deterred by conventional banking mindsets. However, resistance from senior executives at traditional banks has been observed.
This delicate situation places banks in a predicament, as they aim to support the development of the crypto industry as dictated by Hong Kong’s policies while simultaneously navigating the concerns raised by the US Securities and Exchange Commission’s recent lawsuits against major exchanges like Binance and Coinbase.
Notably, pro-Beijing lawmaker Johnny Ng, who is also a member of China’s top political advisory body, has invited Coinbase and other crypto exchanges to establish a presence in Hong Kong, even following the SEC’s legal action.
This demonstrates Hong Kong’s enthusiasm for the sector, despite the potential challenges and risks involved.
HSBC, Standard Chartered, and Bank of China hold significant positions in Hong Kong, serving as issuers of the city’s currency and occupying key roles within the Hong Kong Association of Banks lobby group.
Standard Chartered stated that it maintains regular dialogue with regulators on various subjects, while HSBC expressed its active engagement in the policies and developments of Hong Kong’s nascent crypto industry.
However, the pressure exerted by the HKMA reflects Hong Kong’s determination to foster a crypto-friendly environment while balancing regulatory concerns.
The outcome of this ongoing push will have implications for the city’s aspirations to become a leading global center for the crypto industry.
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