Hong Kong Put Pressure on 3 Major Banks to Take On Crypto Exchanges as Clients: Report

The Hong Kong Monetary Authority put pressure on HSBC, Standard Chartered and Bank of China, according to the Financial Times.

AccessTimeIconJun 15, 2023 at 5:57 a.m. UTC
Updated Jun 15, 2023 at 7:27 p.m. UTC

The Hong Kong Monetary Authority (HKMA) is putting pressure on HSBC, Standard Chartered and Bank of China to take on crypto exchanges as clients, the Financial Times reported on Thursday citing three people with knowledge of the matter and a letter.

"Due diligence on potential customers should not “create undue burden”, particularly “for those setting up an office in Hong Kong to look for the opportunities here,” said the April 27 letter from the HKMA to banks, according to the Financial Times.

Hong Kong has taken recent steps to emerge as a global crypto hub – its Securities and Futures Commission (SFC) began accepting applications for crypto trading platform licenses on June 1, and a Hong Kong lawmaker invited Coinbase to come and register in the region. Hong Kong's ambitions coincide with lawsuits by U.S. regulators against the world's biggest cryptocurrency exchanges, Binance and Coinbase.

"We have dialogues with different stakeholders from time to time on a host of matters," an HKMA spokesperson said in an email to CoinDesk. "It is our general practice not to confirm, deny or comment on any of those meetings."

The UK-based HSBC and Standard Chartered, and Bank of China, were asked by HKMA at a meeting last month why they were not accepting crypto exchanges as clients, according to the FT. The three banks are among the largest in the world. Bank of China is a majority state-owned Chinese commercial bank.

“HKMA encouraged the banks to not be afraid,” FT quoted a person with knowledge of the discussion. “There is resistance from a conventional banking mindset ... we are seeing some resistance from senior executives at traditional banks.”

The HKMA spokesperson also said that with the implementation of the new rules, banks in Hong Kong "should endeavor to meet the legitimate business need of licensed [Virtual Asset Service Proviers] ... and provide the required banking services."

"The HKMA has consistently communicated the importance of banks following the risk-based approach to managing the risks of individual customers," the spokesperson said, adding that the HKMA issued a circular in April to provide further guidance to banks on the provision of banking services to corporate customers, including crypto firms.

Banks and payment settlers have had a tricky relationship with crypto companies globally. Last year, some payment processors cut off local exchanges in India, and recently reports have emerged that Australia's banks have been blocking payments to crypto exchanges. While no ban on crypto clients exists in Hong Kong, banks appear to be reluctant to engage with the industry for fear of legal challenges in the event of a scam.

“We have active dialogues with virtual asset players to exchange views on a range of topics, including but not limited to account opening," an HSBC spokesperson told CoinDesk. "We remain very engaged on policies and developments of this nascent industry in Hong Kong.”

A spokesperson for Standard Chartered told CoinDesk that it has "regular dialogue" with regulators on different subjects.

Bank of China did not immediately respond to CoinDesk's requests for comments.

UPDATE (June 15, 07:00 UTC): Adds comment from the spokespersons of HSBC and Standard Chartered.

UPDATE (June 15, 10:19 UTC): Adds comments from an HKMA spokesperson.

Edited by Sam Reynolds and Sandali Handagama.


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Amitoj Singh

Amitoj Singh is a CoinDesk reporter.