The under-attack crypto sector in the US may find its new hub in Hong Kong as the city’s crypto firms are now finding support from Chinese state-owned banks.
According to the Bloomberg report published on Monday, March 27, many Chinese banks have directly contacted crypto firms to offer banking services as Hong Kong continues its push toward becoming a digital assets hub.
Crypto firms rushing into Hong Kong are finding a surprising source of potential support: China’s state-owned banks https://t.co/Q3txZOMr5r
— Bloomberg Crypto (@crypto) March 27, 2023
A Fresh Breeze for Crypto
According to people cited in the publication, the Hong Kong branches of the “Bank of Communications, Bank of China, and Shanghai Pudong Development Bank have either started offering banking services to local crypto firms or have made inquiries.” Furthermore, salespersons from one of these banks have even visited a crypto firm’s office to pitch their services.
This development is a fresh breeze for the crypto sector, which is currently suffocating in the United States. As discussed, top crypto-friendly lenders, including Silvergate Capital, Silicon Valley Bank (SVB), and Signature Bank, are no longer in the game after bankruptcy and being taken down by financial regulators. Rumors suggest that banks with crypto ties are the target of regulators.
More recently, The White House annual financial report to Congress spared no words to prove crypto is a bad strain on the financial sector. Crypto companies are receiving notices and subpoenas and are being charged.
Given the know-your-customers (KYC) issues, getting a corporate account has always been difficult for crypto and blockchain firms worldwide. Banks often avoid crypto clients to shield themselves from regulatory actions. Even with an account, there is no smooth going. Banks often flag transactions related to digital assets firms and suspend accounts.
However, Chinese state-owned banks are now more open to crypto clients in Hong Kong than before. It is an opportune time for the digital assets industry. According to Sung Min Cho, founder and chief executive of beoble, a messaging system provider for decentralized applications, it is something “you’d never expect at this point, even around the globe.”
Hong Kong is moving forward with its crypto push announced in 2022, and according to a Financial Times publication, crypto groups are eyeing expansion to Hong Kong to “tap soaring demand to trade digital coins from mainland China, which remains the world’s fourth-largest crypto market despite Beijing’s 2021 ban against the sector.”
Many believe the recent easing of crypto rules in the city has backing from mainland China. This suggests that China is giving back some space to crypto.
Binance CEO Changpeng Zhao also welcomed the news by saying:
“When one door closes, other ones open.”
When one door closes, other ones open.
Chinese banks court crypto firms in Hong Kong | The Straits Times https://t.co/1FALEWKRNV
— CZ 🔶 Binance (@cz_binance) March 27, 2023