Benzinga - Hong Kong is encouraging banks to cater to the needs of licensed virtual-asset firms — a move that highlights the city's ambition to establish itself as a leading cryptocurrency center.
Meanwhile, in the U.S., banks are tightening restrictions on the digital-asset sector.
The Hong Kong Monetary Authority (HKMA) issued a statement on Thursday, which called on banks to assist regulated virtual-asset businesses by addressing "their legitimate need for bank accounts" in the city, Bloomberg reported.
The statement, signed by Deputy Chief Executive Arthur Yuen, advised banks to invest in staff training and establish specialized teams to support the digital-asset sector, while cautioning against a "wholesale de-risking approach" that might deter new industries or specific nationalities.
Globally, banks are becoming more cautious about the industry, particularly after events such as the FTX (CRYPTO: FTT) exchange debacle and the market crash.
The fall of crypto-friendly banks Signature Bank and Silvergate Capital Corp. this year has been particularly damaging, forcing the sector to search worldwide for alternative payment channels.
As the U.S. tightens regulations on the cryptocurrency industry and issues warnings about liquidity risks, an increasing number of virtual-asset businesses are either leaving the U.S. or considering doing so, while others seek to expand abroad.
In contrast, Hong Kong plans to introduce a new licensing system for crypto platforms on June 1, allowing retail investors to trade major tokens like Bitcoin (CRYPTO: BTC) and Ether (CRYPTO: ETH).
Bank of Communications Co., Bank of China Ltd., and Shanghai Pudong Development Bank's Hong Kong branches have either started providing banking services to local crypto firms or have expressed interest in doing so, according to sources familiar with the situation.
Hong Kong's largest virtual bank, ZA Bank Ltd., intends to offer token-to-fiat currency conversions through licensed exchanges. In addition, Arthur Yuen announced that the HKMA and the Securities and Futures Commission are co-hosting a round table on Friday, bringing together lenders and virtual-asset platforms to discuss account opening procedures and share other relevant information.
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