In a recent turn of events, the Hong Kong’s central bank is encouraging financial firms to engage with the crypto sector. Notably, the central bank recently asked major banks — including HSBC, Standard Chartered and Bank of China — why they aren’t accepting crypto exchanges as clients.
According to media reports, the Hong Kong Monetary Authority (HKMA), which serves as the region’s central bank and regulator, is pressurising major banks, including HSBC and Standard Chartered, to accept crypto exchanges as clients. Sources familiar with the matter say that the HKMA in a meeting held in May questioned the U.K.-based firms as well as the Bank of China on the topic.
In the official document from the meeting, the HKMA “encouraged the banks to not be afraid.” Additionally, the sources revealed that there is opposition from the listed banks on taking crypto clients. The bank cited this to be harmful to the nation’s pro-crypto approach.
We are seeing some resistance from senior executives at traditional banks.
Notably, over the past months, Hong Kong authorities have taken various measures to establish themselves as the crypto hub. In particular, the central bank issued a notification to all the banking institutions in April urging them to pay attention to new market developments and encouraging them to adopt a more ambitious approach to new sectors such as the crypto market. In their notice, Hong Kong’s central bank specifically required the institutions to help crypto firms, which it calls “virtual asset service providers,” in gaining access to banking services.
In January, Chen Maobo, Hong Kong Financial Secretary, said that the government has been working on multiple pilot cryptocurrency-related projects. The region has been advocating for comprehensive crypto regulations and is also working on stablecoin regulation.
Due to their pro-crypto approach, Hong Kong has been attracting several banking institutions and fintech firms. In particular, the British banking institutions nonetheless have been cautious of cryptocurrencies and have cited the harms involved in it.
While the Hong Kong regulators are opting for ways to favour the crypto sector, the region has also seen a remarkable increase in digital assets crime. The police recently announced that the total number of crypto scams in the region has surged to 2,336 by the end of 2022 which was about 67% more than the 2021 incidents. Reportedly, law enforcement agents coped with 1,884 of the cases.