- Hong Kong is urging some of the largest banks in the region to support crypto exchange firms in a bid to embrace Bitcoin, Ethereum, Litecoin, and other cryptocurrencies.
- The regulatory uncertainty in the West sets up Hong Kong to be the hub of crypto.
Reports are emerging that Hong Kong is urging banks in its region to support crypto exchanges and related firms. Hong Kong regulators reportedly called out HSBC and Standard Chartered to take on crypto exchanges as clients. The Hong Kong Monetary Authority (HKMA) inquired about the two banks based in the UK as well as the Bank of China on their hesitance to serve crypto firms.
In its aim to become the virtual asset hub, Hong Kong took the first step earlier this month when it implemented new licensing requirements for crypto exchanges. Unlike the West whose rules have been deterring the adoption of cryptocurrencies and the establishment of crypto firms, Hong Kong has taken a balanced approach that promotes adoption and emphasizes investor protection. This is clearly demonstrated by the government’s crypto development policies.
In a letter dated April 27, HKMA questioned the banks on their hesitance to serve all entities that are seeking opportunities in the region. The regulator called on the traditional banks to embrace the new business and not be afraid.
HKMA encouraged the banks to not be afraid. There is resistance from a conventional banking mindset . . . we are seeing some resistance from senior executives at traditional banks.
According to some sources, these banks are conflicted by the need to adopt government policies and concerns about scrutiny in regard to anti-money laundering and KYC issues. Both Standard Chartered and HSBC have stated that there is ongoing communication between them and the government and are actively monitoring the development of the crypto industry in the region.
Hong Kong Eyeing U.S Firms
The latest development in Hong Kong comes at a time when U.S. policies seemingly strangle the industry. Earlier this month, the U.S. Securities and Exchange Commission (SEC) filed lawsuits against two of the largest crypto exchanges- Binance and Coinbase. The agency has in the past gone after other exchanges like Kraken.
Ripple has in the past threatened to leave the U.S. market with Hong Kong emerging as one of the preferred destinations for its headquarters. Although Coinbase has never suggested leaving the U.S. market, it has raised concerns that the recent attacks could deter crypto firms from the U.S.
If the set trend continues, Hong Kong could easily become the crypto hub of the world.
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