Hong Kong Government Takes a Stand: Pressure Mounts on Banking Giants to Embrace Crypto

Hong Kong Government Takes a Stand: Pressure Mounts on Banking Giants to Embrace Crypto
Crypto goes mainstream! Hong Kong's monetary authority is turning up the heat on big banks like HSBC and Standard Chartered. Rumor has it they're pushing them to cozy up to crypto exchanges. Will they take the plunge into the wild world of digital currencies? 

According to the Financial Times, three sources familiar with the matter revealed that the Hong Kong Monetary Authority (HKMA) raised queries in a May meeting directed at both U.K.-based firms and the Bank of China. The HKMA questioned why these institutions were not accepting cryptocurrency exchanges as clients. 

Interestingly, less than a month prior, on April 27, the HKMA issued a circular to banking institutions, urging them to closely monitor emerging market trends and embrace a more proactive stance towards sectors like cryptocurrency.

The Hong Kong central bank's document explicitly mandated that institutions assist "virtual asset service providers," commonly known as crypto firms, in obtaining access to banking services. This requirement highlights the emphasis placed on facilitating the involvement of crypto-related entities by Hong Kong's regulatory authorities.

HKMA circular to major banking institutions. Source: HKMA

As per an insider familiar with the discussions held during the previous month's meeting, the HKMA provided encouragement to banks, urging them not to succumb to fear. However, it was revealed that there is indeed opposition from senior executives at traditional banks when it comes to accepting crypto clients. Despite the HKMA's push, some individuals within the banking sector remain hesitant about embracing the cryptocurrency industry. Amidst a challenging regulatory landscape for exchanges in the United States, Hong Kong is exerting pro-crypto pressure. On June 5, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, accusing the exchange of violating domestic securities laws. The following day, on June 6, the SEC also sued Coinbase on similar allegations. These legal actions highlight the ongoing scrutiny and regulatory challenges faced by cryptocurrency exchanges in the United States. Binance.US, in a filing made on June 12, expressed that the lawsuit brought by the SEC was exerting considerable strain on its relationships with U.S. banking partners. Moreover, Binance Australia had to cease all Australian dollar services, including deposits and withdrawals, due to the termination of its banking connections by local payments provider Zepto. These incidents underscore the mounting challenges faced by Binance and its affiliates in maintaining banking partnerships and services amidst regulatory scrutiny.

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