Chinese banks offices in Hong Kong are trying to take advantage of the situation with the closure of cryptocurrency banks in the U.S. and take their place in an industry of digital assets in this region
Major Chinese banks have started offering banking services to cryptocurrency companies in Hong Kong. After cryptocurrency-friendly banks from the U.S. faced difficulties. Support for the industry from Chinese banks could fill the void and give a new boost to the industry in the region.
Over the past few months, Hong Kong branches of banks such as Bank of Communications, Bank of China and Shanghai Pudong Development Bank have reached out to local cryptocurrency firms to offer their services. And in one case, representatives from a Chinese bank even visited a cryptocurrency company’s office.
Due to regulatory uncertainties and the riskiness of digital assets, traditional financial institutions have usually avoided working with cryptocurrencies. But the latter need banking services to hold fiat money, pay staff and pay suppliers. According to Hong Kong cryptocurrencies, digital asset firms have been forced to find various workarounds to meet such operational banking needs.
At the same time, banks in Hong Kong did not routinely offer digital asset exchange services for fiat currencies. Therefore, many crypto firms turned to overseas banks such as Silvergate and Signature. Since the closure of these banks, crypto firms have had to look to them for a replacement. And industry representatives note that the “green light” from Beijing is opening up new opportunities for the market.
Hong Kong regulators to hold meeting between crypto companies and banks
Hong Kong authorities have scheduled a meeting of representatives of cryptocurrency companies and banks, according to Bloomberg. It will discuss the provision of banking services to firms working with digital assets.
The meeting will be held on April 28 at the Hong Kong Monetary Authority (HKMA) and will be held jointly with the Hong Kong Securities and Futures Commission (SFC) Both regulators oversee cryptocurrency activities. According to the announcement, the purpose of the discussion will be to “facilitate direct dialogue” between banks and cryptocurrencies and “share practical experiences and perspectives in opening and maintaining bank accounts.”
HKMA and SFC representatives told the publication that they would not comment on any details of the meeting. But they clarified that they are in dialogue with interested parties.
Huge benefit for Hong Kong
This year, Chinese government officials in Hong Kong started to frequently attend cryptocurrency events in Hong Kong. Industry participants see this as a positive attitude from Beijing toward Hong Kong’s intentions to become a cryptohub. Companies previously operating in mainland China (does not include 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 are among the priorities for companies from the crypto industry. Who intend to develop in this region. Banks in Hong Kong are well positioned to take advantage of the situation after the banking crashes in the U.S. While many Asian companies have partnered with friendly U.S. banks in the past, this is unlikely to happen again in the future due to regulatory issues.
Our experts note that Hong Kong would greatly benefit from such actions. However, the question remains whether the geopolitical climate will deter non-Asian crypto projects from cooperating with Chinese banks.