Hong Kong Opens New Opportunities By Allowing Crypto Firms Access to Banks

Key Points:

• The Hong Kong Monetary Authority said that it expects lenders to collaborate with fully regulated cryptocurrency enterprises to assist them in opening bank accounts.
• Meanwhile, the HKMA said that banks should assist regulated crypto companies with their legal need for bank accounts.
• The SFC previously said that it would issue rules on its crypto exchange licensing system in May.

Hong Kong regulators are pressing banks to offer critical services to cryptocurrency firms as part of a multifaceted effort to promote the city as an industry powerhouse.

With the pandemic gone, the Hong Kong economy is recovering speedily, and many newly created or abroad enterprises are eager to open bank accounts in Hong Kong to investigate commercial prospects.

Banks are speeding up the processing of account opening applications in response to increased demand. In effect, there have been increasing complaints about how difficult it is to get an account, with some claiming that banks would reject applications owing to anti-money laundering (AML) concerns and perceived high risks.

To that purpose, the authorities have actively talked with banks in recent months, informing them that there is no legal or regulatory requirement banning Hong Kong banks from offering banking services to virtual (VA) linked organizations.

In a blog post signed by Arthur Yuen, the Hong Kong Monetary Authority’s deputy chief executive, the watchdog said it expected regulated virtual asset service providers (VASPs) to be able to successfully register for a bank account via a fair procedure.

According to a Bloomberg, the HKMA indicated in a circular issued later that day that banks should assist licensed crypto companies with their legitimate demand for bank accounts.

The statement also urged bankers to educate employees and develop specific teams to help the digital-asset industry rather than taking a wholesale de-risking approach that excludes new businesses or nationalities.

The operating permit includes certain special stipulations, according to which traders with a portfolio of fewer than $1 million are subject to various limitations under Hong Kong legislation.

Moreover, the new rules only enable investors to purchase and sell large-cap currencies like Bitcoin (BTC) and Ethereum (ETH). Yet, this is still seen as a significant step towards allowing cash to flow from Asia into the cryptocurrency market.

The adjustments come after Hong Kong’s Securities and Futures Commission said yesterday that it would issue rules on its crypto exchange licensing scheme in May.

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