Why Big Banks Like HSBC & Standard Are Being Pressured To Accept Crypto Clients In Hong Kong

At a time when the US is declaring an all-out war against crypto exchanges, Hong Kong is busy taking steps to become the world's new crypto hub.

Hong Kong's Ambition To Become A New Crypto Hub

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Hong Kong had recently allowed retail investors to trade cryptocurrency, and the crypto exchanges could offer trading services to individuals and institutions if they secured and complied with licences designed to shield investors from the risky practises exposed in the 2022 crash.

Hong Kong¡¯s Securities and Futures Commission has already received dozens of inquiries from interested parties, as per a Bloomberg report.

On the other hand, there have been mixed movements regarding crypto globally, with jurisdictions like Hong Kong and Dubai already seeking to attract companies, while Singapore is planning curbs on retail-investor participation. Meanwhile, the European Union had in April approved the most comprehensive digital-asset rules of any developed economy.

Big Banks Are Pressured To Accept Crypto Clients

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And now, Hong Kong seems to be in no mood to take things slowly in its bid to become a crypto hub. It has turned out that big banks such as HSBC and Standard Chartered are among those facing pressure from Hong Kong's banking regulator to take on crypto exchanges as clients, the Financial Times reported today, citing three people with knowledge of the matter.

The UK-based lenders and the Bank of China were questioned last month by the Hong Kong Monetary Authority (HKMA) on why crypto exchanges were not being accepted as clients, according to the report.

Standard Chartered is in regular dialogue with regulators on different subjects, it said in an emailed statement to Reuters, declining to comment further on the FT report.

Also Read: How This Artist Used ChatGPT To Create A Meme Crypto Coin That Now Has A $44 Million Market Value

"Don't Create Undue Burden On Crypto Exchanges"

In a letter to lenders a couple of months ago, the HKMA said diligence on potential customers should not "create undue burden", especially "for those setting up an office in Hong Kong."

While banks do not have a ban on crypto clients, they are reluctant to take on crypto exchanges over fears they could be prosecuted if the platforms are used for money laundering or other illegal activity.

The pressure underscores the difficulties being created by Hong Kong¡¯s push to establish itself as a global centre for the crypto industry despite a series of high-profile and damaging collapses, including the implosion of FTX, as per the FT report.

Hong Kong's urging banks to accept crypto clients comes at a time when countries such as the U.S. are doubling down on crypto exchanges, with the U.S. affiliate of the world's largest crypto exchange, Binance, halting dollar deposits last week after the Securities and Exchange Commission (SEC) asked a court to freeze its assets.

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