The Hong Kong Monetary Authority (HKMA) issued a circular on April 27, 2023, urging banks to offer their services to cryptocurrency firms. The circular implored authorized institutions to adopt a risk-based approach in their Anti-Money Laundering efforts when providing banking services to corporate customers.
Hong Kong’s central bank and primary financial regulator also advised the institutions to stay alert to market developments and adopt a forward-thinking approach towards emerging sectors such as the crypto market. The regulator stated that authorized institutions should prioritize facilitating legitimate banking needs for virtual asset service providers (VASPs) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC).
The financial regulator emphasized that the level of Customer Due Diligence (CDD) measures should correspond to the level of risk posed by customers not to burden them unfairly. The regulator highlighted that in the CDD process, authorized institutions should consider the “approval-in-principle” granted by the relevant authority to VASP license applicants instead of waiting until the VASP license is officially granted before taking action.
The Hong Kong Monetary Authority also encouraged lenders to train their employees and establish specialized departments to assist the cryptocurrency industry without adopting a wholesale de-risking approach that excludes emerging industries or specific nationalities.
Earlier this month, Paul Chan, the Financial Secretary of the Hong Kong Government, expressed his belief that despite the cryptocurrency market’s volatility, now is the opportune time for the city to advance Web3. In a blog post, Chan highlighted the enormous growth potential of third-generation internet applications and the positive feedback they have received from society.
Drawing parallels to the emergence of the internet in the early 2000s following the dot-com bubble burst, Chan expressed his confidence in driving forward with the advancement of Web3. To ensure that Web3 progresses steadily along the path of innovative growth, Hong Kong has recently laid out plans to prioritize appropriate regulation and developmental support.
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