Representative offices of Chinese banks in Hong Kong are trying to take advantage of the situation with the closure of cryptocurrency banks in the United States and take their place in the region’s digital asset industry
Major Chinese banks have begun offering banking services to cryptocurrency companies in Hong Kong, Bloomberg reports, citing sources familiar with the matter. After the US banks friendly to cryptocurrencies have encountered difficulties, the support of the industry from Chinese banks can fill the resulting “void” and give a new impetus to the development of the industry in the region.
Over the past few months, the Hong Kong divisions of banks such as Bank of Communications, Bank of China and Shanghai Pudong Development Bank have turned to local crypto firms to offer their services. According to the publication, in one case, representatives of a Chinese bank even visited the office of a crypto company.
Due to the ambiguity in regulation and the riskiness of digital assets, traditional financial institutions usually avoided working with crypto companies. But the latter need banking services for storing fiat funds, paying staff and settlements with suppliers. According to representatives of Hong Kong crypto companies, firms dealing with digital assets were forced to look for various workarounds to meet such operational banking needs.
At the same time, banks in Hong Kong did not offer services in the field of exchanging digital assets for fiat currencies on a regular basis, so many crypto firms turned to foreign banks such as Silvergate and Signature. After the closure of these banks, crypto firms are forced to look for a replacement for them, and industry representatives note that the “green light” from Beijing opens up new opportunities for the market.
This year, Chinese government officials in Hong Kong began to frequently attend cryptocurrency events in Hong Kong. Industry participants see this as a positive attitude of Beijing towards Hong Kong’s intentions to become a crypto hub. Companies that previously operated in mainland China (excluding Hong Kong and Macau), as well as foreign firms, have begun to register their business in Hong Kong and plan to move to Chinese territory.
At the same time, the ability to open bank accounts and access banking services is one of the priorities for companies from the crypto industry that intend to develop in the region. Hong Kong banks have every chance to take advantage of the situation after the bank failures in the United States, Sean Lee, co-founder and CEO of the Hong Kong crypto wallet Odsy Network, told the publication. Despite the fact that many Asian companies have cooperated with friendly US banks in the past, this is unlikely to happen again in the future due to regulatory problems.
According to Lee, Hong Kong will benefit enormously from such a turnaround. However, he noted that the question remains whether the geopolitical climate will deter non-Asian projects from cooperating with Chinese banks.