**Hong Kong Banking Regulator Urges Banks to Accept Crypto Exchanges as Clients**
The U.S. crypto industry is still dealing with the aftermath of the Securities and Exchange Commission (SEC) lawsuits against Binance and Coinbase. However, in Hong Kong, the banking regulator is putting pressure on banks to accept crypto exchanges as clients.
**Pressure on Traditional Banks and HKMA’s Intervention**
Traditional banks have been hesitant to onboard crypto exchanges as clients, especially given FTX’s failure last year and recent regulatory actions in the U.S. Nevertheless, the Hong Kong Monetary Authority (HKMA) has questioned several banks about their reluctance to accept crypto clients. The HKMA has made it clear that banks should not fear doing business with crypto exchanges, according to the Financial Times.
The Financial Times obtained a copy of an April letter sent by the HKMA to several banks including Bank of China, HSBC, and Standard Chartered. The letter stated that due diligence should not pose an “undue burden” when accepting crypto exchanges as clients, particularly if a company plans to establish an office in Hong Kong.
On a separate occasion, the Hong Kong banking regulator admitted to the pressure campaign, acknowledging that it had urged lenders to accommodate the business needs of licensed crypto exchanges, as reported by Reuters.
**Contrasting Stances: Hong Kong vs the U.S.**
Hong Kong’s growing acceptance of crypto stands in stark contrast to the United States, where the SEC recently filed lawsuits against two of the largest crypto exchanges, Binance and Coinbase.
In its bid to become an attractive destination for crypto firms, Hong Kong reinstated retail crypto trading through select exchanges on June 1. Some speculate that this move signals a potential thawing of China’s crypto ban since Hong Kong’s crypto-friendly approach may influence its mainland counterpart.
According to a Twitter thread by Omid Malekan, an adjunct professor at Columbia Business School, China never truly banned cryptocurrencies but rather sought to exert control over the industry. Malekan states that anecdotal reports suggest a flourishing crypto industry in China, including crypto mining. China is believed to be the second-largest player in mining, contributing approximately 20% of the global hashrate.
While U.S. regulators and certain politicians have tried to curb or eliminate crypto, it is evident that China is leveraging Hong Kong as a proxy. The more the U.S. cracks down on crypto, the greater the incentive for other countries, especially geopolitical rivals, to adopt and embrace it.
**Conclusion**
As the crypto industry continues to navigate regulatory challenges, the Hong Kong banking regulator is urging traditional banks to accept crypto exchanges as clients. This progressive stance places Hong Kong in contrast to the U.S., where regulatory actions have led to lawsuits against major crypto exchanges. Hong Kong’s growing acceptance of crypto may also influence China’s crypto ban, potentially leading to a thawing of restrictions.
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