The Hong Kong Monetary Authority (HKMA), the region’s central banking institution and regulator, has called on banks to provide services to cryptocurrency businesses..
On April 27, the HKMA published a circular related to corporate clients’ access to banking services. In the document, the regulator has required licensed institutions, referred to as “AIs”, to take a risk-based approach in anti-money laundering efforts.
The HKMA also urged Hong Kong institutions to pay attention to market developments and take a forward-looking approach to new sectors such as the cryptocurrency market.. Hong Kong’s central bank has specifically required institutions to help virtual asset service providers (VASPs) obtain banking services, stating:
“AIs should strive to support VASPs licensed and regulated by the Securities and Futures Commission in their legitimate need for Hong Kong bank accounts.”
The regulator stressed that customer due diligence (CDD) measures must be proportional to the level of risk of customers so as not to create an undue burden on them..
For example, if a VASP has applied for a license under Hong Kong’s new cryptocurrency regulatory regime and only wants to open an account for their own corporate use, AIs must provide the service even before approval, the HKMA said. The authority wrote:
“[Authorized institutions] should give due regard to the ‘approval-in-principle’ issued by the relevant authority to VASP license applicants in the CDD process instead of taking no actions until the VASP license is actually granted.”
[Las instituciones autorizadas] should pay due attention to the ‘approval in principle’ issued by the relevant authority to VASP license applicants in the CDD process rather than taking no action until the VASP license is actually granted.”
Besides, The statement encourages lenders to train their staff and create specialized divisions to support the cryptocurrency sector, while avoiding a “wholesale risk reduction approach” that rejects new sectors or certain nationalities..
The news comes amid Hong Kong’s preparations to adopt new cryptocurrency regulations that will officially allow retail investors to buy and sell cryptocurrencies such as bitcoin (BTC) and Ether (ETH).. As previously reported, the new crypto licensing regime is scheduled to go into effect on June 1, 2023.
While Hong Kong has been actively attracting cryptocurrency companies, some major global jurisdictions like the United States have partially impeded the industry. Several major exchanges, including Coinbase, have considered leaving the US due to the government’s unwillingness to develop clear regulations around cryptocurrencies..
According to a report by Andreessen Horowitz, the proportion of global cryptocurrency developers based in the United States decreased by 26% between 2018 and 2022.
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