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Market

Hong Kong Urges HSBC And Standard Chartered To Approve Cryptocurrencies: FT

June 15, 2023 - Around 2 mins mins to read

Key Points:

  • The Hong Kong Monetary Authority (HKMA) pressures HSBC and Standard Chartered to accept crypto exchange clients.
  • HKMA said diligence on potential customers should not “create undue burden”, especially “for those setting up an office in Hong Kong,”
  • Due to regulatory concerns, banks are trying to turn away customers from trading cryptocurrencies.
Hong Kong’s banking regulator is pressuring lenders, including HSBC and Standard Chartered, to take on crypto exchanges as customers, the Financial Times reports.
Hong Kong Urges HSBC And Standard Chartered To Approve Cryptocurrencies: FT

The UK-based lenders and the Bank of China were questioned by the HKMA last month on why crypto exchanges were not being accepted as clients, according to the report.

Banks do not have a ban on customers using cryptocurrencies. Still, they are reluctant to participate in exchanges out of concern that they could be prosecuted if the platforms are used to launder money or other illegal activities.

The HKMA, in a letter to lenders on April 27, said diligence on potential customers should not “create undue burden,” especially “for those setting up an office in Hong Kong,” the FT report said.

In a time when nations like the U.S. are stepping up their efforts to regulate cryptocurrency exchanges, Hong Kong is urging banks to accept cryptocurrency customers. Last week, the U.S. subsidiary of Binance stopped taking deposits in dollars after the Securities and Exchange Commission petitioned a court to freeze its assets.

Hong Kong Urges HSBC And Standard Chartered To Approve Cryptocurrencies: FT

Regulators are calling for banks to provide services to virtual asset companies as the city strives to become a hub for the crypto industry. Regulators have stopped requiring banks to trade cryptocurrencies like Bitcoin but are asking them to allow crypto-related companies to open accounts to facilitate regular business, such as paying wages and rent.

On the other hand, for accounts involving assets belonging to crypto companies’ customers, banks must take a more “risk-based approach” to evaluating applications.

During a meeting with banks, the HKMA reminded lenders that it is not illegal to conduct business with crypto companies – unlike in mainland China, where transactions are not unlawful related to cryptocurrencies have been banned since September 2021.

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