Hong Kong Regulator Pressures HSBC and Standard Chartered to Take on Crypto Clients

Hong Kong’s banking regulator pressures HSBC and Standard Chartered to accept crypto exchanges as clients

Hong Kong is trying to attract more crypto businesses to the city by launching a new licensing regime for crypto platforms in June. However, banks are reluctant to take on crypto exchanges as clients due to the risk of money laundering or other illegal activity.

The Hong Kong Monetary Authority (HKMA) has urged lenders, including HSBC Holdings, Plc (NYSE:HSBC) and Standard Chartered PLC (OTC:SCBFY) (OTC:SCBFF), to not impose excessive due diligence on potential customers, especially those setting up an office in Hong Kong, according to a letter dated April 27 obtained by Financial Times.

The letter also stated that banks should not reject crypto exchanges solely based on their business model or the reputation of the industry. The HKMA said it expects banks to adopt a “risk-based approach” and “exercise professional judgement” when dealing with crypto-related businesses.

The letter was sent by Arthur Yuen, deputy chief executive of the HKMA, who oversees banking supervision. It was addressed to Peter Wong, deputy chairman and chief executive of HSBC’s Asia-Pacific operations, Bill Winters, group chief executive of Standard Chartered, and Gao Yingxin, vice-chairman and chief executive of Bank of China (Hong Kong).

HSBC, Standard Chartered, and Bank of China have a unique role in Hong Kong as issuers of the city’s currency and hold the chair and two vice-chair posts at the Hong Kong Association of Banks lobby group.

The HKMA’s letter comes amid a series of regulatory actions against crypto exchanges around the world. In June, the U.S. Securities and Exchange Commission (SEC) charged two leading crypto exchanges, Binance and Coinbase Global, Inc (NASDAQ:COIN), for violating U.S. securities laws.

Hong Kong was home to Sam Bankman-Fried’s FTX exchange before it migrated to the Bahamas, and the stablecoin Tether and digital assets exchange Crypto.com came into existence.

Interestingly, pro-Beijing lawmaker Johnny Ng, a member of China’s top political advisory body, invited Coinbase and other crypto exchanges to set up in the city following the SEC lawsuit.

This blog post is based on information from Benzinga.com .

Related Stories:

Hong Kong’s leading crypto operator Genesis Block ceases trading as FTX fallout roils sector Hong Kong Gets Web3 Makeover: BlockShow & BlockDown Unite for Epic Crypto Festival China’s State-Owned Greenland Bets on Hong Kong’s Crypto Future Typhoon Saola to Bring Heavy Rains, Strong Winds to Hong Kong and Southern China HSBC and Mastercard Expand Crypto Footprint with New Trademark Applications Hong Kong slams US report as biased and meddling in its affairs Hong Kong Takes a Step Towards Crypto Regulation with Proposed Stablecoin Issuer Licences Bitcoin Boom: Standard Chartered Predicts BTC Price at $100,000 by 2024!