Hong Kong has urged banks to provide services to licensed virtual asset firms as part of its effort to become a crypto hub.
The Hong Kong Monetary Authority said in a circular signed by Deputy Chief Executive Arthur Yuen late Thursday that banks should support regulated virtual asset businesses with their legitimate need for bank accounts in the city.
Special Teams Will Be Established to Support the Industry
In a statement by the Hong Kong Monetary Authority, lenders have been ordered to train staff and form dedicated teams to support the digital asset industry, to avoid a wholesale hedging approach that turns new industries down.
One of the biggest challenges facing crypto companies globally has been that they have become increasingly skeptical about the industry after the market crash and the FTX bankruptcy. The collapse of crypto-friendly Signature Bank and Silvergate Capital Corp. in this year’s US banking crisis was a huge blow to companies, forcing the industry to scout for alternative payment channels.
A long period of turmoil has led the US to increase regulatory pressure on the crypto industry and has warned of the liquidity risks that result from it.
A growing number of virtual asset businesses are considering exiting the US economy, while other projects plan to expand outside the US. In turn, Hong Kong will allow retail investors to trade crypto assets like Bitcoin and Ethereum with a new regulation for crypto platforms on June 1.
However, Bank of Communications, Bank of China, and Shanghai Pudong Developement Bank have started offering banking services to local crypto firms.
Hong Kong’s largest virtual bank, ZA Bank, plans to offer token-fiat currency conversions via licensed exchanges.
Deputy Chief Executive Arthur Yuen also said that the Hong Kong Monetary Authority and the Securities and Futures Commission will host a meeting on April 28 for lenders and virtual asset platforms to exchange views on account opening and other useful information.
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