Hong Kong Crypto Firms Found Potential Support From Chinese Bank Branches

Key Points:

• The Hong Kong arms 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.
• This shows that the city’s drive to become a significant digital asset hub has received backing from Beijing.
• Cryptocurrency companies flocked to Hong Kong after the city opened its doors to the once tightly regulated sector.

According to Bloomberg News, people familiar with the matter say that the Hong Kong branches of the Bank of Communications of China, Bank of China, and Shanghai Pudong Development Bank may have started offering banking services goods to local crypto companies or doing field investigations.

At least once, a sales representative of a Chinese bank visited a crypto company’s office to showcase their services, people familiar with the matter said.

Despite the fact that trading in cryptocurrencies has been prohibited on the Chinese mainland for well over a year, Chinese banks have been directly contacting cryptocurrency businesses over the past few months. This indicates that Beijing supports the city’s efforts to become a major digital asset hub.

The lenders are filling a hole left by the failure of American tech banks Silicon Valley Bank, Silvergate Capital, and Signature Bank, which makes it a good time as well.

Bank of China, Bank of Communications, and Shanghai Pudong Bank did not respond to requests for comment at press time.

February 20, the Hong Kong government proposed rules allowing retail investors to trade cryptocurrencies on licensed exchanges, in stark contrast to mainland China where cryptocurrency-related exchanges are completely banned.

Hong Kong’s latest move to legalize retail crypto trade sends a strong message that Hong Kong is taking a different approach to regulating its capital markets, aiming to become a cryptocurrency hub.

With the latest easing protocol, Hong Kong’s crypto rules will be as open as the Singapore market. However, to prevent bad actors from taking advantage of loopholes in this area, the proposal made by Hong Kong stipulates that all virtual currency exchanges concentrate their operations in the city or market services to the public. The territory’s investors must obtain a Hong Kong Securities and Futures Commission license.

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