The Hong Kong Monetary Authority (HKMA) is reportedly encouraging major banks like HSBC, Standard Chartered, and Bank of China to engage with cryptocurrency clients. The move follows Hong Kong’s recent efforts to become a significant global center for the crypto industry. However, banks might be hesitant to work with crypto exchanges due to concerns of potential prosecutions related to illicit financial activities.
Throughout a meeting last month, the HKMA inquired why banks have refrained from accepting crypto exchanges as clients. Although the banks have not directly banned crypto clients, they may be concerned about possible liabilities if the exchanges are utilized for illegal purposes. Still, the HKMA stated that due diligence for such clients should not create an unnecessary burden, particularly for newly established businesses in Hong Kong seeking opportunities.
The encouragement from the HKMA is met with resistance from a traditional banking mindset. As banks continue to examine the crypto landscape, they must strike a balance between supporting the industry and adhering to anti-money laundering and know-your-customer (KYC) regulations.
Hong Kong’s attempts to become a global crypto hub have been met with some skepticism, particularly from crypto pioneer Bobby Lee. He founded China’s first Bitcoin exchange and is the founder of US-based crypto storage provider Ballet Global. Lee warns that Hong Kong’s ambitious plans to lead the crypto industry might lack sustainability. He argues that officials who let exchanges obtain a license may have overinflated expectations for connections with mainland China, where digital asset trading remains prohibited.
Recent measures taken by the Hong Kong government include the implementation of a new regulatory framework for cryptocurrencies on June 1st. Under this rule, retail investors in the city are allowed to trade specific large-cap tokens on licensed exchanges, provided that safeguards like knowledge tests, reasonable exposure limits, and risk profiling are implemented. Additionally, the city’s Securities and Futures Commission (SFC) has begun providing licenses for crypto exchanges.
However, Lee predicts that in three to five years, the city may change its stance on cryptocurrency once again and announce a ban on the industry. Despite the push from HKMA for traditional banks to cooperate with crypto clients, potential long-term changes may impact the relationship between banks and the cryptocurrency industry and hinder Hong Kong’s ambition to become a global crypto hub.
Source: Cryptonews
