As Hong Kong rolls out its new licensing regime for crypto-trading platforms, the city's central bank, the Hong Kong Monetary Authority, is reportedly encouraging major banks in Hong Kong to bank crypto exchanges.
A spokesman for the HKMA stated that banks:
should endeavor to meet the legitimate business need of licensed [Virtual Asset Service Providers] ... and provide the required banking services
According to the Financial Times, in April, the HKMA sent a letter encouraging banks not to "create undue burden" for exchanges looking to set-up in Hong Kong and has held private discussions with HSBC, Standard Chartered and Bank of China on banking services for crypto platforms.
Meanwhile, the investment banking arm of the Bank of China, BOCI, has issued tokenised notes on the Ethereum blockchain in Hong Kong.
In collaboration with UBS, a Swiss banking giant, BOCI offered CNH200 million (approximately AUD$40 million) worth of structured notes to clients in the Asia Pacific region. This marks the first instance of a Chinese financial institution issuing tokenised securities on a public blockchain in Hong Kong.
The adoption of blockchain technology for tokenising financial and real-world assets has garnered attention from major banks such as Citigroup and Bank of America, who believe it can drive widespread cryptocurrency adoption and bring trillions of dollars of value on chain. Citi has dubbed tokenisation blockchain's 'killer use case'.
Both developments highlight Hong Kong's continued ambition to become a key crypto hub, particularly as regulatory pressure on the industry intensifies in the United States. In response to the U.S. Securities and Exchange Commission's recent lawsuit against Coinbase, Hong Kong legislator Johnny Ng extended an invitation to digital asset trading platforms, including Coinbase, to establish a presence in the city. The recent media release also highlighted BOCI's deputy chief executive Ying Wang's enthusiasm about Hong Kong's digital economy and the innovative development of its financial industry.
Following several notable legislative, regulatory, and judicial developments, Hong Kong looks set to resume its position as Asia's leading hub for digital assets innovation.