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Crypto Firms in Hong Kong Get Boost as Regulators Host Meeting with Bankers

Hong Kong officials intend to host a meeting of crypto companies and bankers in an effort to facilitate financing for the sector as the city strives to become a global crypto hub. The April 28 meeting at the Hong Kong Monetary Authority is intended to “facilitate direct dialog” between the two sides and “share practical experiences and perspectives in opening and maintaining bank accounts,” according to Bloomberg.

The Hong Kong Monetary Authority, the city’s central banking institution, will co-host the meeting with the Securities and Futures Commission, another top regulator overseeing stablecoins and crypto exchanges, according to the report. Because of strict know-your-customer (KYC) and anti-money laundering (AML) rules, crypto companies are finding it increasingly difficult to open corporate bank accounts in the city, even for basic needs such as payroll accounts.

It also comes at a time when many crypto firms are looking for new banking partners in the aftermath of the recent banking crisis in the United States, which saw the closure of three major crypto-friendly banks, including Silicon Valley Bank, Silvergate Capital, and Signature Bank.

As previously reported, a number of Chinese state-owned banks in Hong Kong, including Bank of Communications, Bank of China, and Shanghai Pudong Development Bank, have either begun or inquired about providing banking services to local crypto firms. The development is viewed as evidence that Hong Kong’s recent move to become a major digital asset center has received support from mainland China.

Christian Hui, Hong Kong’s Secretary for Financial Services and the Treasury, stated last week that more than 80 digital asset companies have expressed interest in establishing a presence in the city since October 2022. The increase comes as the city has recently taken a more crypto-friendly stance in an attempt to reclaim its position as a global crypto hub and attract more crypto companies, particularly those having difficulty operating from mainland China.

Among the more encouraging developments is the publication of a consultation paper by Hong Kong’s Securities and Futures Commission (SFC) on its proposed regulatory regime for crypto trading platforms, inviting market participants to share their thoughts. Retail investors will also be permitted to trade certain “large-cap tokens” on licensed exchanges, provided that safeguards such as knowledge tests, risk profiles, and reasonable limits on exposure are in place.

Meanwhile, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the United States have launched an aggressive crackdown on the cryptocurrency industry. The CFTC announced yesterday that it is suing Binance and its founder, Changpeng “CZ” Zhao, on allegations that the crypto exchange knowingly offered unregistered crypto derivative products in the United States, in violation of the law.

Prior to this, the SEC issued a “Wells notice” to Coinbase, threatening the crypto exchange with legal action over some of its listed digital assets, including its staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet.

 

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