Hong Kong Financial Regulators mandated their banks to Provide Banking services to Crypto firms
Hong Kong’s Monetary Authority (HKMA) has issued a notice urging authorized institutions (AIs). They asked them to don’t pull back from providing banking services to virtual asset service providers (VASPs. Even before receiving a license.
KEY TAKEAWAYS
- Hong Kong Monetary Authority (HKMA) has asked the AIs to provide banking services to the VASPs
- This action of Hong Kong Regulators shows their support for the new emerging crypto firm.
The AIs must adopt a risk-based approach to Anti Money Laundering (AML) efforts as per the notice. Moreover, it enforced paying attention to market developments and having a better approach to the crypto market.
The HKMA has specifically asked the AIs to support VASPs which are licensed and regulated by Hong Kong Security. And Futures Commission (SFC) if they are looking for a bank account in Hong Kong. The Financial Regulators emphasized that Customer Due Diligence (CDD) measures should be equal to the risk level of the customers.
The notice or circular stated that VASP has applied for a license under Hong Kong’s new crypto regulatory regime. Also wants to open an account merely for its own use. In that case, then AIs must start providing services even before the approval.
The HKMA stated that the AIs should give due regard to the ‘approval-in-principle’ issued by the relevant authority to VASP license applicants in the CDD process. It is important instead of taking no action until the VASP license is actually granted.
This is a significant move by the HKMA and is expected to make operations easier in Hong Kong for crypto firms. It is a positive signal for regulatory clarity and to support the crypto industry in the region.
The new statement released is part of a broader effort by the Hong Kong regulators to establish a comprehensive regulatory framework. Especially for crypto assets, which also includes licensing requirements for VASPs.
What else is to be implemented?
The HKMA’s statement not only asks to provide banking services to VASPs but it also encourages them to train their staff. This is to create dedicated divisions to support emerging crypto firms. It is also against the ‘wholesale de-risking approach’ that would offend certain nationalities or turn away new industries.
This move by Hong Kong regulators holds great significance in the country as it supports the commitment to support the growth of the crypto industry. While Hong Kong is attracting crypto companies. Major crypto global jurisdictions like the U.S. have started to turn away from it.