Following complaints about the difficulty for crypto companies to open a bank account in the territory, the Hong Kong Monetary Authority (HKMA) has stepped in to clarify the official position on the matter.
In a column on the HKMA website, deputy chief executive, Arthur Yuen, said that the authority had reminded the banks that, “there is no legal and regulatory requirement prohibiting banks in Hong Kong from providing banking services to virtual assets (VA) related entities.”
Yuen added that when it came to conducting customer due diligence (CDD) on account applications, the banks should adhere to a “risk-based approach” rather than applying a “one-size-fits-all” attitude to businesses in the digital asset sector.
This means that banks should differentiate between potential levels of customer risk and apply CDD measures proportionately. For example, an applicant perceived as high-risk could perhaps be offered a simple bank account providing basic banking services, depending on its needs.
Hong Kong is implementing a new licensing regime for virtual asset firms on June 1st, as it strives to build its reputation as a crypto-friendly jurisdiction. Yuen accepted that some VA businesses may present a higher AML risk and cause banks to be cautious, but said that under the new regime, “we expect that regulated virtual asset service providers (VASPs) will be able to successfully apply for a bank account through a reasonable process.
As Observers wrote last month, published proposals for the new regulatory scheme had seen reports of Chinese banks proactively offering services to crypto firms that would be prohibited on the mainland. However, it appears that this hasn’t filtered down to every crypto entity, and there are still those struggling to get accounts.
There is a similar problem facing digital assets businesses in the UK, with reports that many are unable to secure bank accounts there too. And without the unequivocal support of the authorities to back them up, companies have seen blanket bans and restrictions from numerous major banks.
NatWest Bank in particular admitted that it did not, “currently offer banking facilities to businesses [that] buy or sell cryptocurrencies. This is a rapidly evolving space in the U.K. and we keep our stance under constant review.”
Several UK banks also limit or block retail customer transfers to crypto exchanges.
With the regulator’s intervention will HK crypto entities now find it easier to open bank accounts? Will the statement see further moves from Chinese banks wishing to sign up forbidden fruit from the islands? Will the UK authorities step in to clarify the matter there?
As always, we continue to Observe.