Hong Kong-based global banks reject crypto transactions citing money laundering concerns
|- While the Hong Kong government encourages banking institutions to support licensed crypto exchanges, two banks have rejected activities related to crypto.
- The banks have raised concerns about cryptocurrencies being used for money laundering and asked for time to update AML procedures.
- China crypto narrative is likely delayed while banks adapt to changing anti-money laundering procedures and update their systems.
Hong Kong, China’s Special Administrative Region (SAR), is bullish on crypto but banking institutions are not as sure. Risk-management models and fears of money laundering have deterred large banks from servicing licensed crypto exchanges in Hong Kong.
Hong Kong banks hit a snag in servicing crypto exchanges
The China crypto narrative recently slowed down when banks raised concerns about the anti-money laundering procedures. Hong Kong’s government has been inviting crypto firms to China’s SAR, however, these exchanges are now struggling to find traditional banks for their services.
While the government has launched a new licensing regime for crypto exchanges, at least two global banks with operations in the city have ruled out activity linked to cryptocurrency trading. Banks are resisting opening accounts for crypto exchange clients and this has hindered government officials eager to help exchanges to get started in Hong Kong.
Hong Kong regulators’ difficulties show how crypto firms are struggling to flourish in Hong Kong despite the government’s efforts to turn China’s SAR into a crypto hub.
While Hong Kong struggles to streamline services for crypto exchanges and firms, the US Securities and Exchange Commission (SEC) continues its crackdown on cryptocurrencies. In January of 2023, a group of US regulators, alongside the central bank, commented on the inconsistencies in the safe and sound banking practices and issuance and holding of cryptocurrencies.
Hong Kong’s banking institutions are likely facing these hurdles while the government pushes the “China crypto narrative” forward.
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