The Hong Kong Monetary Authority (HKMA), which serves as the region’s central bank and regulator, has reportedly put pressure on major banks, including HSBC and Standard Chartered, to accept crypto exchanges as clients.
According to a June 15 report from the Financial Times, which cited three sources familiar with the matter, the HKMA questioned the U.K.-based firms as well as the Bank of China in a May meeting — asking the institutions why they weren’t taking on cryptocurrency exchanges as clients.
Less than a month before on April 27, the HKMA issued a circular to banking institutions 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 the document, 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.
According to a source familiar with the content’s of last month’s meeting, the HKMA “encouraged the banks to not be afraid.” The source added that there is opposition to taking on crypto clients.
“We are seeing some resistance from senior executives at traditional banks,” they said.
A spokesperson from the HKMA told Cointelegraph that the implementation of the new regulatory framework for VASPs is an important part of the tech development ecosystem and that banks operating in Hong Kong should "endeavour to meet the legitimate business needs" of licensed VASPs. The HKMA declined to comment further on the content of May's meeting.
Similarly, a spokesperson from Standard Chartered said that it engages in "regular dialogue" with regulators but could not disclose any additional details concerning the matter.
A representative from HSBC told Cointelegraph that it engages in "active dialogues with virtual asset players to exchange views on a range of topics" and that it remains "very engaged on policies and developments of this nascent industry in Hong Kong.”
Hong Kong’s pro-crypto pressure comes amid a turbulent regulatory environment for exchanges in the United States.
In a June 12 filing, Binance.US claimed that the SEC's lawsuit was placing significant pressure on its relationships with its banking partners in the U.S. Additionally, Binance Australia was recently forced to shut down all Australian dollar services, including withdrawals and deposits, after its banking ties were severed by local payments provider Zepto.
Meanwhile, some lawmakers from Hong Kong appear more welcoming of crypto firms.
On June 10, Hong Kong Legislative Council member Johnny Ng expressed his support for embattled crypto firm Coinbase on Twitter and went as far as inviting it to establish operations on more friendly ground.
I hereby offer an invitation to welcome all global virtual asset trading operators including @coinbase to come to HK for application of official trading platforms and further development plans. Please feel free to approach me and I am happy to provide any assistance. pic.twitter.com/bcIi1IjMlc— Johnny Ng 吴杰庄 (@Johnny_nkc) June 10, 2023
On June 1, Hong Kong enacted a new suite of crypto regulations that allowed for locally-licensed crypto firms to begin operations. From this point onwards, any firm with a valid license can service retail investors, allowing them to trade cryptocurrencies, including Bitcoin (BTC) and Ether (ETH).
Update (June 16, 2:41am UTC): This article has been updated to include comment from HSBC, Standard Chartered and the Hong Kong Monetary Authority.