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Hong Kong Put Pressure on Three Major Banks to Take on Crypto Exchanges As Clients: Report

The Hong Kong Monetary Authority (HKMA) is putting pressure on HSBC, Standard Chartered and Bank of China to take on crypto exchanges as clients, the Financial Times reported on Thursday citing three people with knowledge of the matter and a letter.

"Due diligence on potential customers should not “create undue burden”, particularly “for those setting up an office in Hong Kong to look for the opportunities here”, the April 27 letter from the HKMA said to the banks, reported the Financial Times.

Hong Kong has taken recent steps to emerge as a global crypto hub – its Securities and Futures Commission (SFC) began accepting applications for crypto trading platform licenses on June 1, and a Hong Kong lawmaker invited Coinbase to come and register in the region. Hong Kong's ambitions coincides with lawsuits by U.S. authorities against the world's biggest cryptocurrency exchanges, Binance and Coinbase.

The UK-based HSBC and Standard Chartered, and Bank of China were asked by HKMA at a meeting last month why they were not accepting crypto exchanges as clients, according to the FT. The three banks are among the largest in the world. The Bank of China is Chinese majority state-owned.

“HKMA encouraged the banks to not be afraid,” FT quoted a person with knowledge of the discussion. “There is resistance from a conventional banking mindset...we are seeing some resistance from senior executives at traditional banks.”

Banks and payment settlers have had a tricky relationship with crypto companies globally. Last year, some payment processors cut off local exchanges in India, and recently reports have emerged that Australia's banks have been blocking payments to crypto exchanges. While no ban on crypto clients exists, Banks appear to be reluctant to engage with the industry for fear of legal challenges in the event of a scam.

HSBC, Standard Chartered, Bank of China, and HKMA did not immediately respond to CoinDesk's requests for comments. Standard Chartered and HSBC told FT they engaged with regulators on a regular basis on policies and developments in this industry.

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