As the US crypto market faces regulatory tensions, Hong Kong is taking every possible step to sway crypto firms for doing business in the region. While the regulators in the US have asked traditional banks to cut ties with crypto firms, Hong Kong does the opposite.
As per the recent development, HK regulators have urged banks to provide services to licensed crypto firms. This comes as part of the city’s plans to establish itself as a crypto hub. In a circular released Thursday, the Hong Kong Monetary Authority said that banks should support regulated crypto businesses with “their legitimate need for bank accounts”.
The statement also asks lenders to train staff and dedicated teams in supporting the crypto sector. Besides, it also asks lenders to avoid the “wholesale de-risking approach” that turns away new industries.
One of the biggest challenges for crypto companies is that banks have been growing skeptical about them considering the volatile behavior of the asset class. This has been specifically true following the major blow-up of the crypto exchange FTX.
Also, regulators have been making crypto the scapegoat amid the current banking crisis emerging in the United States and the collapse of Silvergate Bank and Signature Bank last month.
Hong Kong Accelerates Its Crypto Ambitions
Hong Kong has been looking to expand its crypto ecosystem just at a time when other markets like the US have announced heavy crackdowns. The city will unveil its new licensing regime on June 1, after which it plans to allow retail investors to trade major cryptocurrencies like Bitcoin and Ethereum.
On the other hand, the Hong Kong central bank recently issued a crypto advisory for banks explaining the legal aspects of dealing with crypto firms. The Hong Kong Monetary Authority has asked banks to cling to a “risk based approach” without compromising on customer due diligence.
Furthermore, the Hong Kong regulator is already planning to release very soon, the rules and regulations for crypto exchanges.
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