The world’s stance on crypto is divided by governments. While some have been openly embracing the industry, a few others remain uncertain. Hong Kong has recently aligned itself with regions that have opted for a regulatory approach to embrace the crypto industry. In addition to the government’s stance, entities operating within the region have also been encouraged to conform to the same notion.
In Hong Kong’s case, the government has reportedly urged HSBC and Standard Chartered to take on crypto exchanges as clients. According to reports, during a meeting held last month, the Hong Kong Monetary Authority [HKMA] raised inquiries to the UK-based banks as well as the Bank of China regarding their reluctance to accept crypto exchanges as clients.
The HKMA emphasized in a letter dated April 27, that conducting due diligence on prospective customers should not impose excessive burdens. This is specifically for entities establishing a presence in Hong Kong with the intention of exploring opportunities in the region. However, not all banks were on board. An anonymous source told Financial Times,
“HKMA encouraged the banks to not be afraid. There is resistance from a conventional banking mindset . . . we are seeing some resistance from senior executives at traditional banks.”
According to a representative from one of the banks, they faced a dilemma. This was between supporting the government’s crypto development policies and concerns about potential scrutiny regarding anti-money laundering and KYC issues.
Additionally, Standard Chartered stated that it maintains ongoing communication with regulators, without specifying further details. HSBC expressed its active involvement in monitoring the policies and advancements within the emerging crypto industry in Hong Kong.
Is Hong Kong banking on U.S. crypto crackdown?
Hong Kong’s latest push comes during a time of extreme scrutiny on the crypto industry in the U.S. With the Securities and Exchange Commission [SEC] going after two major exchanges Binance and Coinbase, U.S. crypto investors were taken aback. The Hong Kong government viewed this as a timely opportunity to reach out to Coinbase and other exchanges to set up shop in the region. A senior executive said,
“[Banks] are having to tread a fine line between on the one hand getting encouragement to support crypto and exchanges, but on the other hand being aware of the US situation.”