Hong Kong is taking steps to become a leading cryptocurrency center by encouraging banks to provide services to licensed virtual-asset firms. This move contrasts with the growing skepticism and regulation of the digital-asset sector in other parts of the world, especially in the US.
According to a statement issued by the Hong Kong Monetary Authority (HKMA) on Thursday, banks should support regulated virtual-asset businesses with “their legitimate need for bank accounts” in the city. The statement, signed by Deputy Chief Executive Arthur Yuen, advised banks to invest in staff training and establish specialized teams to support the digital-asset sector, while cautioning against a “wholesale de-risking approach” that might deter new industries or specific nationalities.
The HKMA and the Securities and Futures Commission are co-hosting a round-table on Friday for lenders and virtual-asset platforms to exchange views on account opening and other useful information.
The statement comes as Hong Kong plans to introduce a new licensing system for crypto platforms on June 1, allowing retail investors to trade major tokens like Bitcoin and Ether. Currently, only professional investors with at least HK$8 million ($1 million) in assets can trade cryptocurrencies in Hong Kong.
Meanwhile, in the US, banks are tightening restrictions on the digital-asset sector amid a market crash and blowups like the FTX exchange debacle. The collapse of crypto-friendly banks Signature Bank and Silvergate Capital Corp. this year has been particularly damaging, forcing the sector to search worldwide for alternative payment channels.
As the US tightens regulations on the cryptocurrency industry and issues warnings about liquidity risks, an increasing number of virtual-asset businesses are either leaving the US or considering doing so, while others seek to expand abroad.
In contrast, some Chinese state-owned banks have been contacting crypto firms in Hong Kong, offering banking services to them. These include the Bank of Communications, the Bank of China, and the Shanghai Pudong Development Bank5. Hong Kong’s biggest virtual bank, ZA Bank Ltd., plans to offer token-to-fiat currency conversions over licensed exchanges.
Hong Kong’s approach reflects its ambition to establish itself as a leading cryptocurrency hub in Asia and beyond. By requiring banks to open accounts for crypto companies, it hopes to foster innovation and growth in the digital-asset sector while ensuring proper regulation and risk management.