Hong Kong’s banking regulator has been putting pressure on major banks.
Major financial institutions are wary of working with the cryptocurrency industry.
In spite of Hong Kong’s efforts to become Asia’s cryptocurrency capital, major financial institutions remain hesitant to join the trend. According to the most recent FT article, Hong Kong’s banking regulator has been putting pressure on major banks. These include Standard Chartered and HSBC for working with cryptocurrency exchanges.
The Hong Kong Monetary Authority (HKMA) reportedly recently questioned the two UK-based lenders and the Bank of China. On why they are not prepared to handle crypto customers, according to sources familiar with the subject.
Wary of U.S Like Situation
The Financial Times has obtained a letter from the HKMA dated April 27 in which the regulator advises banks not to “create undue burden” while doing due diligence on cryptocurrency businesses, especially “for those setting up an office in Hong Kong to look for the opportunities here.”
Even while no country has outright banned cryptocurrencies, major financial institutions are nonetheless wary of working with the cryptocurrency industry for fear of legal repercussions if customers use cryptocurrency exchanges for criminal purposes like money laundering. However, this may be a setback for Hong Kong’s efforts to become a cryptocurrency hub for the world.
The US Securities and Exchange Commission (SEC) sued cryptocurrency exchange Coinbase last week for allegedly breaking federal securities laws. It wasn’t long before the Hong Kong lawmaker extended an invitation to Coinbase to open an office in the territory.
Recent events, however, have placed financial institutions in a precarious situation. There is a lot of pressure on banks to support crypto and exchanges, according to a senior executive who spoke during a meeting of the banks. However, banks must walk a fine line between receiving encouragement to support crypto and exchanges and remaining aware of the US situation.
The executive continued, adding that banks are torn between wanting to support the growth of the business if it is a policy of the Hong Kong government and worrying about being investigated for potential violations of anti-money laundering and know-your-customer regulations.