By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
9
Notification Show More
News
Tony Blair’s staff took part in ‘Gaza Riviera’ project with BCG
18 minutes ago
News
US threatens tariffs ‘boomerang’ next month if no deals are struck
1 hour ago
News
Iran’s supreme leader appears in public for first time since Israeli attack
4 hours ago
News
How to really make America healthy again
5 hours ago
News
China snaps up mines around the world in rush to secure resources
7 hours ago
News
Mining boss calls for price support to challenge China’s critical minerals dominance
8 hours ago
News
Big Food’s snack binge unravels as Americans ditch sweet treats
9 hours ago
News
It pays to be vulnerable — but please pick your moments
10 hours ago
News
Musk launches US political party to fight ‘one-party system’
11 hours ago
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > News > Hong Kong’s crypto push puts HSBC and StanChart in a bind
News

Hong Kong’s crypto push puts HSBC and StanChart in a bind

News Room
Last updated: 2023/06/26 at 8:40 PM
By News Room
Share
6 Min Read
SHARE

Receive free Cryptocurrencies updates

We’ll send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning.

HSBC has had a history of money-laundering lapses. It was fined a decade ago in the US for its role in enabling Latin American drug cartels, and in the UK in 2021 for a string of failures including serving the leader of a criminal gang.

So it is understandable that the bank and its peer Standard Chartered might not be keen to take crypto exchanges as clients in Hong Kong.

“Like come on. They are here for crime,” Binance’s then-chief compliance officer Samuel Lim said in a 2020 chat about some of its customers, according to a court filing by the Commodity Futures Trading Commission — the kind of statement that does little to endear either it or its rivals to large and highly-regulated banks.

Now that the US Securities and Exchange Commission is suing Binance and Coinbase in a widening crackdown on the crypto industry, the risks of providing even basic banking services to exchange operators look greater than ever. And the potential rewards seem small.

Except, that is, when it comes to keeping Hong Kong’s regulators on side. Hong Kong — the birthplace of stablecoin Tether and the former home of now-collapsed exchange FTX — is trying to become a global crypto hub.

But many crypto exchanges “can’t get bank accounts, and that’s making it difficult”, said Gaven Cheong, a partner who advises on crypto funds at the PwC-affiliated law firm Tiang & Partners. “If you set up a bank account for a crypto exchange, you’ve got to worry about the flows that are coming in.”

As a result, Cheong says the banks are concerned about protecting themselves against charges for handling the proceeds of crime. But Hong Kong’s watchdogs seem to be actively trying to bring in crypto business, including by cajoling banks to make life easier for exchanges and meeting founders facing crackdowns in the US.

Tyler Winklevoss, whose New York crypto exchange Gemini was sued by the SEC in January, tweeted last week about a “great meeting” with Hong Kong’s Securities and Futures Commission and said: “Hong Kong is ready to lead in crypto.”

Few in Hong Kong’s finance community seem to know why the territory wants to attract crypto firms, given the series of damaging collapses in the industry and the US’s move in the opposite direction.

Some speculate that Beijing decided to use Hong Kong as a testing ground for ways mainland China might one day allow crypto to return. Others say Hong Kong is worried that its role as a financial centre is in decline — in part because of Singapore’s rise as a rival Asian finance hub.

Whatever the reasons, the pressure from the Hong Kong Monetary Authority is real. The regulator has summoned HSBC, Standard Chartered and other banks to a series of meetings to ask them why they are not providing the basic services that would enable crypto exchanges to rent offices and pay staff in the territory.

It wants them to consider providing banking services to even those crypto firms that Hong Kong’s SFC has not yet awarded a licence, especially if they are in the process of applying for one, it said in a letter to banks in April. A top executive at a crypto firm applying for the licence said the letter “was one of the most direct I’ve ever seen a regulator issue”.

But it is unable to offer meaningful reassurance. If banks were found to be handling the proceeds of crime it would fall to law enforcement bodies such as Hong Kong’s police or potentially the US Department of Justice — not the HKMA — to take action. That puts the banks in an awkward position. If they keep Hong Kong’s political and regulatory elite happy, they risk putting themselves in the DoJ’s firing line.

The other option is to alienate Hong Kong, and risk losing goodwill in a market that is financially and strategically vital. Their best hope might be that Hong Kong’s stringent approach to regulating crypto kills its allure.

So far, HSBC appears to be engaging in a delicate dance, turning up to meetings with regulators and making at least some of the right noises while its senior executives remain cautious. But it cannot do that indefinitely. In the end, this is about more than crypto. For HSBC’s leaders, it is a test of how intelligently they can navigate competing demands from the bank’s twin bases, east and west, at a time of fracturing political ties. That problem will present itself in different forms, and perhaps with greater intensity, in the years to come.

kaye.wiggins@ft.com



Read the full article here

News Room June 26, 2023 June 26, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Tony Blair’s staff took part in ‘Gaza Riviera’ project with BCG

The Tony Blair Institute participated in a project to develop a postwar…

US threatens tariffs ‘boomerang’ next month if no deals are struck

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Iran’s supreme leader appears in public for first time since Israeli attack

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

How to really make America healthy again

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

China snaps up mines around the world in rush to secure resources

Stay informed with free updatesSimply sign up to the Mining myFT Digest…

- Advertisement -
Ad imageAd image

You Might Also Like

News

Tony Blair’s staff took part in ‘Gaza Riviera’ project with BCG

By News Room
News

US threatens tariffs ‘boomerang’ next month if no deals are struck

By News Room
News

Iran’s supreme leader appears in public for first time since Israeli attack

By News Room
News

How to really make America healthy again

By News Room
News

China snaps up mines around the world in rush to secure resources

By News Room
News

Mining boss calls for price support to challenge China’s critical minerals dominance

By News Room
News

Big Food’s snack binge unravels as Americans ditch sweet treats

By News Room
News

It pays to be vulnerable — but please pick your moments

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?