Why Hong Kong wants more banks to accept crypto customers

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The US crypto industry is still reeling from last week’s Securities and Exchange Commission lawsuits against Binance and Coinbase, but in Hong Kong, the country’s banking regulator is pressuring banks to accept crypto exchanges as clients.

Some traditional banks have been wary of adding crypto exchanges as customers, especially given the failure of FTX last year and recent regulatory moves in the US. But the Hong Kong Monetary Authority recently questioned several banks about not accepting crypto clients and tried to make it clear they shouldn’t be afraid, the Financial Times reported on Wednesday.

The FT viewed an April letter sent to banks, including Bank of China, HSBC and Standard Chartered, in which the HKMA said due diligence should not create an undue burden for accepting crypto exchanges as clients. , particularly if a company sets up an office in Hong Kong.

On Thursday, Hong Kong’s banking regulator acknowledged the pressure campaign, saying it had asked lenders to try to meet the trading needs of licensed crypto exchanges, Reuters reported.

Hong Kong’s increasingly warm stance toward crypto stands in stark contrast to that of the United States, where two of the biggest crypto exchanges, Binance and Coinbase, were sued by the SEC last week.

Hong Kong, in an attempt to position itself as an attractive destination for crypto businesses, on June 1 restored retail crypto trading through select exchanges, with some speculating that its friendliness to the industry may precede a thaw in crypto. China’s crypto ban.

According to a Twitter thread by Omid Malekan, an assistant professor at Columbia Business School, China never really banned crypto, but simply sought to assert its control over the industry.

there were still anecdotal reports of a thriving crypto industry in China, including mining, Malekan wrote. Today, China is widely considered to be second in mining with around 20% of the global hashrate.

While US regulators and some politicians have attempted to severely limit or eradicate crypto, many see China using Hong Kong as a sort of proxy.

The more America suppresses, writes Malekin, the greater the incentive for others to adopt, especially geopolitical rivals.

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