HSBC, Standard Chartered, and Bank of China Pressured by Hong Kong to Embrace Crypto Exchanges – Next Crypto Hub?
Hong Kong’s banking regulator has reportedly exerted pressure on banks including HSBC, Standard Chartered, and Bank of China to engage with crypto clients.
During a meeting last month, the Hong Kong Monetary Authority (HKMA) questioned why the banks had not accepted crypto exchanges as clients, The Financial Times reported, citing people familiar with the matter.
The HKMA told the banks that due diligence on such potential customers should not “create undue burden,” particularly “for those setting up an office in Hong Kong to look for the opportunities here.”
Though banks have not banned crypto clients, they may be reluctant to accept exchanges on the basis that they could be prosecuted if the exchanges are used for illicit purposes.
“HKMA encouraged the banks to not be afraid,” the FT report said, citing a person familiar with the discussions.
“There is resistance from a conventional banking mindset . . . we are seeing some resistance from senior executives at traditional banks.”
The call for increased involvement in the crypto industry follows Hong Kong’s move to establish itself as a major global center for crypto, despite high-profile and damaging crashes such as that of FTX.
Pro-Beijing lawmaker Johnny Ng has invited exchanges such as Coinbase to set up in the city, despite recent legal action against some of the world’s largest crypto exchanges by the US Securities and Exchange Commission (SEC).
Banks are now being forced to strike a balance between supporting crypto while also heeding concerns over anti-money laundering and know-your-customer (KYC) regulations.
One senior executive stated that banks are “having to tread a fine line between on the one hand getting encouragement to support crypto and exchanges, but on
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