Top Banks Reluctant to Accept Crypto Clients Despite Pressure from Hong Kong Regulators
While Hong Kong is shifting gears to establish itself as the crypto hub of Asia, top banks aren’t much willing to join the party. As per the latest report from FT, Hong Kong’s banking regulator has been pressuring top lenders such as Standard Chartered and HSBC for taking crypto exchanges as their clients.
Sources familiar with the matter said that the Hong Kong Monetary Authority (HKMA) recently questioned the two UK-based lenders along with the Bank of China on why they are not willing to take crypto clients.
In a letter dated April 27, seen by Financial Times, the HKMA told banks that due diligence on crypto firms shouldn’t “create undue burden”, particularly “for those setting up an office in Hong Kong to look for the opportunities here”.
Despite no ban on crypto, top banks stay hesitant to serve crypto clients under the fear that they could face prosecution if these clients turn to platforms for money laundering or other illegal activity. However, this could serve as a roadblock to Hong Kong’s push of establishing itself as a global center for cryptocurrencies. A source familiar with the matter told Financial Times:
“HKMA encouraged the banks to not be afraid. There is resistance from a conventional banking mindset . . . we are seeing some resistance from senior executives at traditional banks.”
Hong Kong Legislator Invites Coinbase
Last week, the US SEC filed a lawsuit against the crypto exchange Coinbase for violating federal securities laws. Soon after, the Hong Kong legislator invited Coinbase to set up a base in the region.
However, the recent developments put banking institutions in a critical position. During a meeting of the banks, a senior executive said that banks “are having to tread a fine line between on the one hand getting encouragement to support crypto and exchanges, but on the other hand, being aware of the US situation”.
The executive added that banks were torn between wanting “to ensure the development of that industry if it’s a policy of the Hong Kong government” while worrying that they might be “taken to task on anti-money laundering or know-your-customer” issues.
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