Key Points

  • Hong Kong Central Bank is asking the banks in the area to be more friendly to crypto clients.
  • Hong Kong banks have recently been featured in news headlines after reports that they were secretly helping crypto platforms.
  • The shift in crypto regulation in Hong Kong marks a major shift in Asia.

The Central Bank of Hong Kong has specifically asked banks under it to help crypto firms by providing financial services. It wants the banks to work well with “virtual asset service providers” by providing them with fiat ramps and similar services.

Crypto adoption turnaround happens in Asia spearheaded by Hong Kong

In a May 2023 meeting, HKMA asked its banks not to fear giving financial services to crypto platforms. It asked major banks, including HSBC, Standard Chartered and the Bank of China, not to be afraid to offer these services. It noticed that amid reports that other banks had already been doing it, these three weren’t accepting crypto exchanges as their clients.

The Hong Kong Monetary Authority (HKMA) is the region’s central bank and regulator. Its bank had previously feared it regarding offering crypto services as mainland China has been against the industry since its first innovation went public. However, a June 15 report from Financial Times now indicates the opposite.

HKMA is now pressuring international banks not to offer their services to crypto exchanges to change the course of their actions as it believes in paying attention to emerging markets and trends. 

In April 2023, HKMA also issued a circular to banking institutions urging them to be more aware of emerging markets like crypto. It asked them to pay attention and develop a more ambitious approach to new sectors as they could be crucial in future economies. 

U.S. might lag further behind in crypto regulation and adoption

These developments from Asia are encouraging, as the region has been known to go hard on crypto. Japan and China have both been resilient in the need for industry reforms. However, Japan accepts the trading of several crypto asset classes. At the same time, China has introduced a blanket ban on all crypto-related assets apart from its own PBOC-issued digital Yuan (e-CNY).

It shows that the tide is turning in that region. However, it is a shocker as the once “friendly” relationship between the crypto industry and the U.S. is becoming a bit sour. Details of poor regulation and hidden deliberations like Hinman’s Documents have surfaced, which showcase aggressive greed and misconduct by top regulators like SEC.

The SEC is already suing Coinbase and Binance for operating without first registering with them. However, it’s good to note that Coinbase had cleared with them before starting operations there. Also, SEC has not yet released a regulatory framework to guide exchanges in what is or is not a security. 

Both the crypto community and lawmakers have heavily criticized this move. As a result, a bill has been tabled in the House of Representatives to restructure the SEC and slash the power given to top executives to reform the regulator. However, it could take longer for the U.S. to catch up with other regions like the E.U., which have already introduced and passed crypto regulation bills into law.

Keep watching Fintech Express for updates on crypto regulation and other fintech-related developments.