The push to support crypto is gaining traction in Hong Kong as some banks are already pledging support to the industry.
The Hong Kong Monetary Authority (HKMA) is truly doubling down on its efforts to provide full support to the digital currency ecosystem with its recent circular to banks operating on the island. In the circular, the HKMA said banks should support exchanges or crypto platforms that have received the right license to operate in the country.
The support will notably be extended to outfits with a “legitimate need for accounts” in what may help bootstrap the confidence among the firms the regulator is trying to woo back that Hong Kong is truly ready for business.
The digital currency ecosystem has experienced a whole lot of strain in recent years and a growing scrutiny from the HKMA initially sent most of the thriving crypto exchanges packing. Last year, the apex banking regulator renewed its interest to revive the island that was once a safe haven for crypto entities.
One of the first moves from the regulator is to remove the trading limit or clause that the minimum trading balance must be $1 million, a sum that is only accessible to institutional investors. Though the desire to permit retail trading is now existent, attracting the right businesses to offer the services remains a hurdle. This new advice to banks may help to change the narrative in the near future.
Banks are very necessary as a conduit for crypto exchanges and their customers to thrive. Amid the growing regulatory scrutiny being faced by these Virtual Asset Service Providers (VASPs), many prominent banks stopped granting access to exchanges, a trend compounded by tough regulations that fueled the exit of some trading platforms from the South Korean market.
While the laws differ from one region to the other, the Travel Rule ethics amongst banks is uniform, thus accounting for why Hong Kong banks are averse to supporting crypto firms.
Hong Kong Banks with Commitment to Crypto
The push to support crypto is already gaining traction in Hong Kong as some banks are pledging support to the industry. According to a Bloomberg report, the Hong Kong arms of Bank of Communications, Bank of China and Shanghai Pudong Development Bank are either already providing services to crypto entities in the region or are actively making inquiries to guide their support in the near future.
Additionally, neobanks like ZA Bank have revealed their intentions to support on and off-ramp products on licensed exchanges in the near term.
Notably, the gravity of the strain in the global financial ecosystem, as it relates to the crypto ecosystem, was felt in the United States following the collapse of Signature Bank and Silvergate Banks. The risk of supporting digital currencies thus got notably enhanced and has largely set the industry back by a huge mile.
Riding on this, the HKMA has advised the banks it supervises not to discriminate and to provide a safe harbor for crypto firms irrespective of their nationalities.