The Hong Kong Monetary Authority (HKMA), the city’s central bank and regulator, has requested that banks offer their services to cryptocurrency firms.
The Hong Kong Monetary Authority issued a circular on corporate customers’ access to financial services on April 27. In the document, the regulator has mandated that authorized institutions, or AI, employ a risk-based Anti-Money Laundering strategy.
HKMA also urged the institutions in Hong Kong to pay heed to market developments and adopt a forward-thinking stance towards new industries such as the cryptocurrency market. Hong Kong’s central bank has mandated that financial institutions assist virtual asset service providers (VASPs) in obtaining banking services.
“AIs should endeavor to support VASPs licensed and regulated by the Securities and Futures Commission on their legitimate need for bank accounts in Hong Kong.”
The regulator emphasized that customer due diligence (CDD) measures must be proportional to their risk level to avoid placing a disproportionate burden on customers.
For instance, if a VASP has applied for a license under Hong Kong’s new crypto regulatory regime and only wishes to establish an account for its corporate use, AIs must provide the service before approval, according to the HKMA. The official wrote:
“[Authorized institutions] should give due regard to the ‘approval-in-principle’ issued by the relevant authority to VASP license applicants in the CDD process instead of taking no actions until the VASP license is actually granted.”
In addition, the statement urged lenders to train personnel and establish specialized divisions to support the crypto industry while avoiding a “wholesale de-risking approach” that excludes new industries or certain nationalities.
Hong Kong is preparing to adopt new crypto regulations permitting retail investors to purchase and sell cryptocurrencies such as Bitcoin and Ether.
According to previous reports, the new crypto licensing regime will be implemented on June 1, 2023.
While Hong Kong has actively attracted crypto companies, other leading global jurisdictions, such as the United States, have somewhat discouraged the industry. Several prominent American exchanges, including Coinbase, have contemplated leaving the country due to the government’s reluctance to establish clear crypto regulations.
According to a report by Andreessen Horowitz, the proportion of U.S.-based crypto developers decreased by 26% between 2018 and 2022.
