Hong Kong Regulators Ask Banks to Help Licensed Crypto Firms, Central Bank Issues Advisory

In the latest development, Hong Kong has urged local banking institutions to offer services to licensed crypto firms as part of its push to become a global crypto hub. This development comes at a time when the US regulators have taken a complete hostile stand towards digital assets while asking banks to withdraw partnerships with crypto firms.

On the contrary, Hong Kong’s central bank - the Hong Kong Monetary Authority - said in a circular on Thursday that banks should support regulated crypto businesses with “their legitimate need for bank accounts”.

Additionally, the statement from the central bank asked the lenders to train staff while also forming dedicated teams in supporting the crypto sector. They have also directed banks to avoid  a “wholesale de-risking approach” which would turn away new industries.

One of the major challenges for crypto companies worldwide is that banking institutions have turned very much skeptical about the global crypto industry after a major blowup of the crypto exchange in November 2022. Also, the US regulators blamed crypto over the collapse of the Signature Bank and the Silvergate Capital Bank.

Amid this hostile behavior from US regulators, a number of crypto firms have decided to shift the base and Hong Kong is just making the right move at the right time. From June 1, 2023, Hong Kong shall unveil a new licensing regime which will allow retail investors to trade major cryptocurrencies such as Bitcoin and Ether.

Interestingly, some of the local banks of Hong Kong such as the Hong Kong arms of Bank of Communications Co., Bank of China Ltd. and Shanghai Pudong Development Bank, have already started offering banking services to some of the native crypto firms.

Hong Kong Securities and Futures Commission Chief Executive Officer Julia Leung recently said that they would be issuing licensing guidelines for crypto trading platforms in May. Additionally, the recent release also notes that the Hong Kong Monetary Authority and the Securities and Futures Commission will organize a round table on Friday for the banking industry as well as the virtual assets service providers (VASPs), to exchange views on account opening along with other information.

One thing is clear that Hong Kong is making every move to seize the opportunity at a time when crypto firms in the US are finding it difficult to continue with the operations.