Although cryptocurrency trading has been banned on the mainland for years, Chinese banks have reached out directly to crypto firms in recent months, adding evidence that Hong Kong’s desire to become an important digital asset hub has support from Beijing.
Hong Kong’s Bank of Communications, Bank of China Hong Kong, and Hong Kong’s Shanghai Pudong Development Bank have all reportedly started offering banking services to local crypto firms or made inquiries about doing so.
At least one source has confirmed that sales staff from a Chinese bank personally visited the cryptocurrency firm’s headquarters to grow business for the organization, as reported by The Guardian. bloomberg.
The olive branch is significant because traditional financial institutions have shunned the industry, making it impossible to obtain basic banking services such as setting up an account to pay employees and suppliers. This comes as Hong Kong continues to thrive as a cryptocurrency hub.
US banking crisis pushes China into cryptocurrency
With the demise of three central US tech banks, Silicon Valley Bank (SVB), Silvergate Capital, and Signature Bank, now is an excellent opportunity for these lenders to step in and help bridge the resulting gap.
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The effort by Chinese lenders “means a lot to us because it’s something you would never imagine at this point, even around the world,” said Mr. Song-Min Chu, founder and CEO of beoble, a messaging system supplier for decentralized applications.
“Having a cryptocurrency account with a TradFi bank is very revolutionary.”
Sungmin Cho, CEO of Beoble.
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What makes it so difficult to have crypto-friendly banks?
Opening a cryptocurrency bank account has always been a challenge.
Traditional banks have been wary of it because of the lack of transparency that comes with anonymity. Cryptocurrency companies in Hong Kong that asked not to be identified said they had to resort to several creative measures to meet their operational banking requirements.
Crypto-focused companies may need up to three months longer than traditional companies to obtain a corporate bank account. As a result, companies often evaluate offers from a dozen or more financial institutions before deciding on one.
Financial institutions often discover transactions involving businesses with digital assets and may abruptly terminate accounts after a warning phone call.
Cryptocurrency traders are having a much more difficult time. Many people have looked to cryptocurrency-friendly banks abroad, such as Signature, or alternatives in Switzerland and the Middle East, since there are almost no local banks that help convert tokens into fiat.
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