The Hong Kong Monetary Authority (HKMA) has issued a circular urging banks to provide services to cryptocurrency firms. The central bank has asked authorized institutions (AIs) to adopt a risk-based approach in Anti-Money Laundering efforts. In addition, the HKMA has encouraged institutions in Hong Kong to pay attention to market developments, especially in new sectors like the crypto market, and support virtual asset service providers (VASPs) in getting banking services. The regulator has stressed that customer due diligence (CDD) measures should be proportionate to the risk level of customers. AIs should give due regard to the ‘approval-in-principle’ issued by the relevant authority to VASP license applicants.
“AIs should endeavor to support VASPs licensed and regulated by the Securities and Futures Commission on their legitimate need for bank accounts in Hong Kong.”
The HKMA has also encouraged lenders to train staff and form dedicated divisions to support the crypto industry while avoiding a “wholesale de-risking approach.” This news comes as Hong Kong prepares to adopt new crypto regulations for retail investors to buy and sell cryptocurrencies like Bitcoin (BTC) and Ether (ETH) starting June 1, 2023.
While Hong Kong welcomes crypto firms, some other major global jurisdictions like the United States have partially impeded the industry. Several major exchanges, including Coinbase, have considered leaving the U.S. due to unclear crypto regulations by the government. Developers in the U.S. also declined by 26% from 2018-2022 according to a report by Andreessen Horowitz.
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