The Hong Kong Monetary Authority (HKMA) has urged the banking sector to provide services to licensed virtual-asset firms as part of the city’s ambition to become a leading crypto hub.

Last week, the Hong Kong financial regulator issued a circular reminding banks of their responsibility to offer access to legitimate crypto businesses. The HKMA emphasised the need for a risk-based approach to anti-money laundering and counter-financing of terrorism (AML/CFT) efforts.

The statement also called for banks to train staff, create dedicated teams to support the digital-asset sector, and proactively engage with new technology-enabled sectors. This approach is intended to strengthen their understanding of emerging sectors and related market developments, whilst avoiding a “wholesale de-risking approach.”

“AIs [authorised institutions] should review their account opening procedures and customer due diligence (CDD) measures,” stated the document signed by HKMA Deputy Chief Executive Arthur Yuen. He also encouraged banks to support the Tiered Account Services initiative and offer Simple Bank Accounts for SMEs and start-ups in need of basic banking services.

In anticipation of Hong Kong’s virtual asset service provider (VASP) license launch by June, the latest guidelines advise financial and banking institutions to support VASPs licensed by the Securities and Futures Commission (SFC). The new framework will require cryptocurrency exchanges and other crypto firms, including decentralised exchanges, to register with the SFC.

HKMA’s advice also highlights that banks should give due regard to “approval in principle” ahead of the new rules coming into force, meaning they should not wait for businesses to receive their VASP license.

As Hong Kong establishes a dedicated regulatory framework and shores up banking support, it is emerging as a hotbed for crypto investment, aiming to be recognised as a Web3 hub.

This move contrasts with the recent crackdown on digital assets in the US, and comes on the heels of news that Chinese state-owned banks like the Bank of Communications and the Bank of China are looking to offer banking services to Hong Kong crypto companies.