Hong Kong’s central bank has urged banks to give services to crypto enterprises before receiving a license.
The Hong Kong Monetary Authority (HKMA), the region’s central banking institution and regulator, has called on banks to give services to cryptocurrency enterprises.
On April 27, the HKMA published a circular related to the access of corporate clients to banking services. In the document, the regulator has needed authorized institutions, referred to as “ AIs, ” to adopt a threat-based approach in Anti-Money Laundering efforts.
The HKMA similarly urged the institutions in Hong Kong to pay attention to market developments and take a forward-looking path to new sectors like the crypto market. Hong Kong’s central bank has specifically needed the institutions to help virtual asset service providers (VASPs) in picking up banking services, stating:
“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 stressed that customer due diligence (CDD) measures should be proportionate to the threat position of clients in order not to produce an undue burden on the customers.
For example, if a VASP has referred for a license under Hong Kong’s new crypto regulatory governance and only wants to open an account for its own corporate usage, AIs should give the service indeed before the approval, the HKMA told. The authority 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.”
Also, the statement inspired lenders to train staff and form dedicated divisions to endorse the crypto industry while avoiding a “ wholesale de-risking way ” that turns off new industries or certain nationalities.
The news comes amid Hong Kong readying to borrow new crypto regulations that will officially allow retail investors to buy and sell cryptocurrencies like Bitcoin BTC $29,389 and Ether ETH $1,901. As preliminarily reported, the new crypto licensing governance is scheduled to be enforced on June 1, 2023.
Related: China’s state-affiliated banks onboarding crypto companies in Hong Kong
While Hong Kong has been actively attracting crypto companies, some major global jurisdictions like the United States retain partially impeded the industry. Several major exchanges have considered leaving the U.S. due to the government’s unwillingness to evolve clear rules around crypto.
According to the report, the share of global crypto developers based in the U.S. declined by 26% from 2018 to 2022.
(HELEN PARTZ, Cointelegraph, 2023)