Hong Kong Encourages Banks to Support Crypto Firms Pre-License
In a recent circular, the Hong Kong Monetary Authority (HKMA) urged authorized institutions to adopt a risk-based approach to Anti-Money Laundering efforts and take a forward-looking approach to new sectors, including the crypto market.
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HKMA emphasized the importance of supporting virtual asset service providers (VASPs) in obtaining banking services in Hong Kong. Banks should consider the “approval-in-principle” issued by the relevant authority to VASP license applicants in the customer due diligence process, rather than waiting for the VASP license to be granted. The regulator also encouraged lenders to train staff and form dedicated divisions to support the crypto industry, avoiding a “wholesale de-risking approach” that would deter new industries or specific nationalities.
This development comes as Hong Kong prepares to enforce new crypto regulations on June 1, 2023, allowing retail investors to buy and sell cryptocurrencies. The city has been actively attracting crypto companies, in contrast to countries like the United States, where regulatory uncertainty has caused some exchanges to consider relocating.
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