• The Hong Kong Monetary Authority (HKMA) is encouraging banking giants to accept crypto exchanges as clients.
• Banks are wary of the regulatory blowback in case their crypto clients are found to be involved in money laundering.
• The HKMA is trying to motivate banks to take on crypto clients in order to turn Hong Kong into a global crypto hub.
Hong Kong Regulator Urges Banks to Accept Crypto Clients
The Hong Kong Monetary Authority (HKMA) is encouraging banking giants to accept crypto exchanges as clients, according to a Financial Times report on June 15. While there are no restrictions holding back Hong Kong banks from accepting cryptocurrency-related businesses, banks remain cautious due to potential regulatory scrutiny should any of their customers be involved in criminal activities such as money laundering.
Banks Wary of Regulatory Blowback
Banks remain wary of the potential negative repercussions if their cryptocurrency-related customers were found guilty of any illegal activity, with the implosion of FTX and alleged mishandling of its client funds only compounding this trepidation. As a result, the HKMA has taken steps towards motivating financial institutions to take on crypto clients and help make Hong Kong a global hub for digital currencies.
HKMA’s Letter Encouraging Banks
In a letter sent out by the HKMA on April 27, it was suggested that due diligence procedures employed by banks should not put an “undue burden” on cryptocurrency firms seeking operations within Hong Kong’s borders. Niel Tan, chair of the FinTech Association of Hong Kong said: “Everything has been done on the government’s side to encourage these banks to facilitate the opening of banking services to the sector.“
China’s Lackluster Stance Towards Cryptocurrency
In comparison with other nations such as Japan or South Korea, China has taken a more lackluster stance towards cryptocurrencies and blockchain technology as a whole – resulting in many projects headed elsewhere for development and growth opportunities. With that being said, President Xi Jinping recently voiced support for blockchain applications within China – raising speculation about future developments within the nation itself regarding increased acceptance for digital assets like Bitcoin (BTC).
Despite having made its intentions clear about wanting cryptocurrency companies operating within its borders, it remains uncertain whether or not banks will actually heed this call from the regulator – leaving those hoping for an easier way into traditional finance disappointed yet again.