The Hong Kong Monetary Authority (HKMA) has issued a circular calling on banks to support crypto firms.
Dated April 27, the document reminds banks of their responsibility to provide access to banking services for legitimate businesses. In line with this objective, it stresses the importance of a risk-based approach to anti-money laundering efforts. However, it insists that these treat banking customers fairly.
Chinese Banks Warm to Crypto
The HKMA’s latest intervention follows news that Chinese State-owned banks are looking to offer banking services to Hong Kong crypto companies.
Furthermore, The Bank of Communications, the Bank of China, and the Shanghai Pudong Development Bank have all reportedly reached out to potential clients in the city’s crypto space.
More recently, Hong Kong’s largest digital bank – ZA Bank – announced that it will enable transfers and conversions between cryptocurrencies and fiat. Meanwhile, as BeInCrypto reported, ZA Bank has already forged deals with the digital asset exchanges HashKey and OSL.
Hong Kong’s Crypto License
Alongside Singapore, Hong Kong has emerged as one of Asia’s preeminent crypto hubs. And the city’s regulators have moved to oversee its burgeoning crypto and Web3 space.
For Hong Kong’s crypto sector, the latest guidelines note that financial institutions “should endeavor to support virtual asset service providers (VASPs)” that are licensed by the Securities and Futures Commission (SFC). Moreover, the document was issued in anticipation of the launch of the city’s VASP license in May.
Under the new framework, cryptocurrency exchanges and other crypto firms will be required to register with the SFC. And unlike some licensing regimes elsewhere, the new rules will affect decentralized exchanges as well as their centralized counterparts.
In its latest advice, the HKMA emphasizes that ahead of the new rules coming into force, banks should give due regard to “approval in principle.” That means banks don’t need to wait for businesses to receive their VASP license.
Instead, the regulator suggests they treat approved firms as if the regime is already in place.
Crypto Investors See Opportunity in Hong Kong
With a dedicated regulatory framework and support from banks, Hong Kong is emerging as a locus of crypto investment.
For example, in March, ProDigital Futures, a Hong Kong-based investment firm, announced its intention to launch a 100 million-dollar crypto fund.
Additionally, this week, Hong Kong hosted the WOW (World of Web3) Summit. The event included a competition in which over 150 startups pitched in front of various investors, venture capitalists, and accelerators. These included Cyberport, Newman Capital, and Blockchain Founders Club.
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