Hong Kong regulators mandate that banks establish accounts for cryptocurrency firms

Prior to receiving a license, Hong Kong’s central bank urged banks to provide services to crypto firms.

The Hong Kong Monetary Authority (HKMA), the city’s central bank and regulator, has requested that banks offer their services to cryptocurrency companies.

The Hong Kong Monetary Authority issued a circular on corporate consumers’ access to financial services on April 27. In the document, the regulator has mandated that authorized institutions, or AI, adopt a risk-based Anti-Money Laundering strategy.

HKMA also urged the institutions in Hong Kong to pay heed to market developments and adopt a forward-thinking stance towards new industries such as the cryptocurrency market. Hong Kong’s central bank has mandated that financial institutions assist virtual asset service providers (VASPs) in obtaining banking services.

“AIs should endeavour to support VASPs licenced and regulated by the Securities and Futures Commission in their legitimate need for bank accounts in Hong Kong.”

To avoid placing a disproportionate burden on customers, the regulator emphasized that customer due diligence (CDD) measures must be proportional to their risk level.

For instance, if a VASP has applied for a license under Hong Kong’s new crypto regulatory regime and only wishes to establish an account for its own corporate use, AIs must provide the service prior to approval, according to the HKMA. The official wrote:

“[Authorised institutions] must take into account the ‘approval-in-principle’ issued by the relevant authority to VASP licence applicants during the CDD process, as opposed to taking no action until the VASP licence is granted.”

In addition, the statement urged lenders to train personnel and establish specialized divisions to support the crypto industry, while avoiding a “wholesale de-risking approach” that excludes new industries or certain nationalities.

Hong Kong is preparing to adopt new crypto regulations that will explicitly allow retail investors to purchase and sell Bitcoin and other cryptocurrencies. According to previous reports, the new crypto licensing regime will be implemented on June 1, 2023.

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