Hong Kong’s ambitious goal to become a leading crypto hub has opened an opportunity for many state-affiliated banks in China. The Chinese banks, despite a blanket ban on crypto-related activities in mainland China, are showing interest in building partnerships and onboarding regulated crypto companies in Hong Kong.
The Hong Kong arm of the major Chinese state-owned Bank of Communications is collaborating with several cryptocurrency businesses registered in the city. The bank is in talks to open accounts for regulated companies, according to a report published in The Wall Street Journal. This is a significant development in the world of crypto, where banks are traditionally hesitant to partner with companies in this industry.
In addition to the Bank of Communications, ZA Bank – Hong Kong’s largest virtual bank controlled by Chinese internet insurer ZhongAn Online P&C Insurance – will also act as the settlement bank for the crypto companies. These banks will together facilitate the depositing and withdrawal of fiat currencies, providing a vital service to crypto companies looking to operate in Hong Kong.
These banks’ involvement in the crypto industry is an excellent sign for Hong Kong, which has been trying to establish itself as a leading crypto hub for some time. At the start of the year, Hong Kong’s financial secretary, Paul Chan, clarified that the city is pushing to collaborate with more crypto firms in 2023. The government’s progressive crypto approach has attracted nearly 80 cryptocurrency firms interested in opening or expanding their business in the city.
The Chinese banks’ involvement in Hong Kong’s crypto industry is a surprise to many in the crypto ecosystem, considering China’s multiple crackdowns on crypto-related activities in mainland China. However, the Chinese banks’ move towards crypto in Hong Kong signals a new direction for the country’s approach to crypto.
As settlement banks, these Chinese banks will enable token deposits at authorized exchanges to be withdrawn in Hong Kong dollars, Chinese yuan, and U.S. dollars. This development will further strengthen Hong Kong’s position as a leading crypto hub, attracting more companies and investors interested in crypto.
The Chinese banks’ interest in Hong Kong’s crypto industry is a positive development, demonstrating the potential for regulatory clarity in the region. Additionally, this move could encourage other banks in the region to follow suit, strengthening Hong Kong’s position as a leading financial hub in Asia.
In conclusion, the involvement of Chinese banks in Hong Kong’s crypto industry is a significant development, demonstrating the potential for collaboration between traditional financial institutions and the crypto industry. This move could help build greater confidence in the crypto industry and attract more companies and investors to Hong Kong. As the city continues to embrace crypto, we can expect to see more developments in this exciting and rapidly evolving industry.