SNEAK PEEK

  • Hong Kong is pressing banks to accept crypto exchanges as clients.

  • Banks balance supporting crypto with regulatory compliance concerns.

  • Hong Kong aims to reestablish itself as a crypto hub.

Hong Kong’s banking watchdog is stirring the waters. According to reports, the Hong Kong Monetary Authority (HKMA) is pressing major lenders like HSBC and Standard Chartered to open their doors to crypto exchanges. This move comes even as American regulators cast a critical eye on the cryptosphere.

Last month, the HKMA confronted UK-based lenders and the Bank of China. The regulatory body questioned their hesitation in accepting crypto exchanges as clients. However, as per insiders, their stance was due to concerns about potential legal consequences if these platforms were used for illicit activities.

Nonetheless, the HKMA insists due diligence shouldn’t create an “undue burden” for businesses seeking opportunities in Hong Kong. It’s clear the regulatory body doesn’t want fear to hinder progress.

Hong Kong’s Cryptocurrency Ambitions Amid Global Skepticism

This month, the US Securities and Exchange Commission launched a lawsuit against Binance and Coinbase, two prominent crypto exchanges. The SEC accused them of breaching US securities laws. Despite this, the enthusiasm for the crypto sector in Hong Kong is palpable.

Johnny Ng, a pro-Beijing lawmaker, invited Coinbase and other crypto exchanges to set up shop in Hong Kong. Interestingly, this invitation followed hot on the heels of the SEC lawsuit.

The challenge for banks, therefore, is to navigate the fine line between supporting crypto and staying on the right side of regulators. Jonathan Crompton, a Hong Kong-based partner at RPC, said the HKMA’s position was “unusual” compared to the more crypto-skeptic regulators worldwide.

Moreover, Hong Kong has a rich history with cryptocurrency. It was the original home of the FTX exchange and has seen the launch of Tether and Crypto.com. Despite setbacks following Beijing’s crypto crackdown, Hong Kong is signaling its desire to reclaim its status as a crypto hub.

In conclusion, these are interesting times for Hong Kong’s banking sector. Pressured by regulatory bodies, these institutions must balance the desire for innovation with the need for security. The question is, “Who will take the plunge into crypto waters?

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