Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority (HKMA), has expressed disapproval of local banks taking a “one-size-fits-all” approach in assessing account opening applications from virtual asset-related firms, and urged banks to provide services to regulated firms, as the city seeks to encourage sustainable and responsible developments in the Web3 space.

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Fast facts

  • In his Thursday commentary on the government agency’s website, Yuen noted that Hong Kong has no legal and regulatory requirement prohibiting banks from providing banking services to crypto-related firms, and urged banks to exercise “proportionate” customer due diligence measures instead of a one-size-fits-all approach.
  • As more crypto-related firms seek to establish in Hong Kong, HKMA has received more feedback about the difficulties of opening bank accounts. Local banks reportedly turned down applications on anti-money laundering concerns and risk issues, according to the commentary titled “Embracing new opportunities and accessing banking services.”
  • HKMA on Thursday also issued a notice urging local lenders to “endeavour to support” licensed and regulated virtual asset service providers on their need for bank accounts in Hong Kong.
  • The notice comes as Hong Kong seeks to build itself into a global crypto hub. The city is set to release its crypto exchange licensing guidelines in May, and will grant licenses to at least eight cryptocurrency-related firms by the end of the year, which would allow them to provide trading services of large-capitalization tokens to retail investors.
  • HKMA and the Securities and Futures Commission of Hong Kong will host a roundtable on Friday where local banks and crypto firms could discuss issues such as setting up a bank account in the city.
  • Multiple banks in Hong Kong have reportedly started to service crypto-related firms, including those with mainland Chinese affiliations, despite Beijing’s ban on cryptocurrency trading. ZA Bank, Hong Kong’s largest online-only bank backed by a Chinese insurance company, has partnered licensed local crypto exchanges HashKey and OSL to provide crypto-fiat conversion services, according to Bloomberg in April.
  • Hong Kong’s efforts come as companies in the U.S. struggle to find banking partners after the collapses of three largest crypto-friendly lenders in March, with some market participants interpreting the U.S. regulators’ approach to Silvergate Bank, Silicon Valley Bank and Signature Bank as a coordinated effort to unbank the crypto industry, which has in recent months received considerable regulatory scrutiny spearheaded by the U.S. Securities and Exchange Commission.

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