Hong Kong Regulator Orders HSBC, Standard Chartered To Tap Crypto Clients

Lenders, including HSBC Holdings, Plc HSBC and Standard Chartered PLC SCBFY SCBFF, faced pressure from Hong Kong's banking regulator to take on crypto exchanges as clients despite a series of collapses, including the FTX.

The Hong Kong Monetary Authority urged the banks not to burden potential customers with due diligence, especially those setting up an office in Hong Kong, Financial Times cites an April 27 letter.

Banks are reluctant to take on crypto exchanges over fears of prosecution due to money laundering or other illegal activity.

In June, the U.S. SEC charged two leading crypto exchanges, Binance and Coinbase Global, Inc COIN for violating U.S. securities laws.

Quite interestingly, pro-Beijing lawmaker Johnny Ng, a member of China's top political advisory body, invited Coinbase and other crypto exchanges to set up in the city following the SEC lawsuit.

Hong Kong was home to Sam Bankman-Fried's FTX exchange before it migrated to the Bahamas, and the stablecoin Tether and digital assets exchange Crypto.com came into existence.

Hong Kong launched a new licensing regime for crypto platforms in June to attract more crypto groups to the city.

HSBC, Standard Chartered, and Bank of China have a unique role in Hong Kong as issuers of the city's currency and hold the chair and two vice-chair posts at the Hong Kong Association of Banks lobby group.

Price Action: HSBC shares traded higher by 0.18% at $38.72 premarket on the last check Thursday.