Hong Kong’s emergence as a global crypto hub is evident, with the monetary authority obligating banks to offer services to the crypto firms before seeking operating licenses. The circular conveyed by the Hong Kong Monetary Authority (HKMA) on April 27 directs all banks to offer services to the cryptocurrency companies in the region.
The circular was penned to guide the facilitation of access of corporate clients to banking services. The regulator mandates all authorized institutions (AI) to embrace the risk-based approach geared towards anti-money laundering efforts.
Hong Kong Readying Banking Support Base for Crypto Companies
The HKMA directs all institutions to remain alert to the ongoing market developments. The circular issued by the central bank institution urges the institutions to embrace a futuristic approach to emerging sectors such as the crypto market.
The administrative region’s central bank is directing the financial institutions to facilitate the virtual asset service providers (VASPs) to access banking services. It identifies it critical to support the VASPs regulated by the region’s Securities and Futures Commission to realize their legitimate need for opening and running bank accounts.
HKMA emphasized that all operators must embrace the customer due diligence (CDD) policies applied relative to the risk levels posed by customers. By doing so, the regulator considers it will relieve customers from bearing undue risk burden.
The authority emphasizes that AIs should facilitate companies seeking the VASP, typically seeking operating licenses in Hong Kong by opening their corporate accounts. HKMA requires the AIs to offer the services sought by firms applying for VASP before securing the license approval.
Authorized Financial Institutions Ordered to Support Crypto Companies
HKMA obligates authorized consideration for the approval-in-principle accorded by other authorities to the applicants. Nonetheless, such should comply with the CDD process rather than AIs wait till the VASP license is granted.
The HKMA statement encourages financial institutions to consider training their staff to offer specialized support to the digital assets industry. Also, the authority is urging the lenders to prioritize establishing dedicated units aligned to nurture the crypto industry. Its accomplishment is necessary, unlike when deploying a wholesale-based approach when de-risking. Often, a one-size-fits-all since it often chases new industries or persecutes particular nationalities.
The revelation of Hong Kong adopting new policy portrays plans to adopt the revised crypto regulation. The provisions enshrined in the proposed regulations are set to permit retail investors to trade various cryptos, including Ether and Bitcoin. Retail investors will benefit as the upcoming crypto licensing becomes effective starting June 1 2023.
Hong Kong Gains in US Loss of Crypto Innovation
Meanwhile, efforts demonstrated by Hong Kong to attract crypto companies contradict the stance embraced by other global jurisdictions. In particular, the US regulators and anti-crypto politicians are partially impeding the crypto industry.
The numerous cases of lawsuits, penalties and closure of operations are forcing major exchanges such as Kraken, Coinbase, Deribit and Bittrex to consider exiting the US Deribit, Coinbase and Gemini recently unveiled plans to open a crypto derivative platform outside the US.
The exchanges cite the government’s unwillingness to develop clear regulations around crypto.
The looming exodus of crypto exchanges is eroding US attractiveness, as Andreessen Horowitz’s report revealed that shares commanded by US-based crypto developers declined by 26% in December 2022 relative to the 2018 activity. The decline will worsen as Hong Kong emerges as a preferred destination, thereby gaining an inflow of crypto innovation.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.