• 17 July, 2024
News

Crypto Companies Find New Friends in Chinese Banks, Thanks to Hong Kong

Chinese state-owned banks are reportedly courting cryptocurrency firms in Hong Kong, despite a crypto ban in China. Several sources have confirmed that banks including the Bank of Communications, Bank of China, and Shanghai Pudong Development Bank have either offered banking services to crypto firms in Hong Kong or made inquiries about it. 

Some reports even suggest that a sales representative from a Chinese bank visited the office of a crypto firm to pitch banking services. This is a notable shift for the sector, which has been largely shunned by major banks and struggled to secure normal banking services like paying staff and vendors.

This new move by Chinese banks could provide a significant boost to the crypto industry in Hong Kong, which is preparing for a new licensing regime for crypto exchanges starting in June. The proposal for this regime was released on February 20 by Hong Kong’s Securities and Futures Commission, and it’s aimed at making the city a major digital asset center.

This development also comes at an opportune time, with US tech banks like Silicon Valley Bank, Silvergate Capital, and Signature Bank failing to provide sufficient support for the sector. Hong Kong-based crypto firms have reportedly had to find various workarounds to meet their operational banking needs.

Despite the ongoing crypto ban in China, these developments suggest that the country is open to exploring opportunities in the crypto industry. It’s possible that Beijing is supporting Hong Kong’s push to become a major digital asset center, even though crypto trading has been banned on the mainland for over a year.

Banking for crypto firms has always been a challenge, given the anonymous nature of cryptocurrency and the strict KYC (know-your-client) procedures required by traditional banks.

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