Hong Kong Regulator Reminds Local Banks There Is No Ban on Crypto Firms – On Thursday, the de facto central bank of Hong Kong announced that banks are being reminded of their ability to offer services to virtual asset companies, addressing complaints regarding the challenges of opening bank accounts within the jurisdiction.
“There is no legal and regulatory requirement prohibiting banks in Hong Kong from providing banking services to virtual assets (VA) related entities,” deputy chief executive of the Hong Kong Monetary Authority (HKMA) Arthur Yuen wrote in a column published on the regulator’s website.
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According to Yuen’s writing, the HKMA has instructed banks to follow a “risk-based approach” while carrying out due diligence and avoid using generic methods for rejecting applications for opening accounts. He admits that certain virtual businesses might pose a greater risk of money laundering and, as a result, banks may exercise more caution while handling applications for opening accounts.
He further observes that banking personnel might lack experience in dealing with emerging markets, and this could be causing them to reject potential customers in order to avoid any associated hassles. In order to counteract this issue and attract more companies to Hong Kong, the jurisdiction has been taking steps to provide greater regulatory clarity to virtual asset service providers.
One such step was the issuance of a circular by the regulator, which provides guidance on the best practices to follow when providing banking services. This move is expected to help banks understand the requirements of virtual asset companies more clearly and assist them in establishing appropriate risk management frameworks.
Ultimately, it is hoped that this will enable more virtual asset companies to gain access to the necessary banking services they require to operate effectively within the jurisdiction. The regulatory clarity being provided by the de facto central bank of Hong Kong is a positive development for the virtual asset industry. By reminding banks of their ability to offer services to virtual asset companies and providing guidance on best practices, the jurisdiction is taking steps towards becoming more welcoming to these emerging businesses.
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With greater regulatory clarity, virtual asset companies will be better equipped to establish themselves in Hong Kong, while banks will be able to manage their risks effectively. This move has the potential to unlock new opportunities for the financial industry in Hong Kong and strengthen its position as a leading global financial hub.