Hong Kong-based crypto firms preparing for the new licensing regime for crypto exchanges in June have found unexpected allies in the region. Chinese state-owned banks, including Shanghai Pudong Development Bank, the Bank of Communications Co., and Bank of China Ltd., have reportedly started offering banking services to crypto firms in Hong Kong or have made inquiries with them, according to “people with knowledge of the matter” cited in a Bloomberg report published on March 27.
The Chinese banks’ support for Hong Kong’s crypto industry is noteworthy given the Chinese government’s ongoing ban on crypto-related activities. One source even claimed that a Chinese bank sales representative visited a crypto firm’s main office to pitch banking services.
“This development is encouraging for both the industry and the broader ecosystem, as it demonstrates a maturing understanding of the crypto sector by traditional financial institutions,” said a representative from a Hong Kong-based crypto firm.
It is unclear which crypto firms have been approached by the state-owned Chinese banks, as a spokesperson for a firm declined to comment. However, this move is seen as a positive step towards legitimizing crypto-related activities in Hong Kong.
In October 2022, the Hong Kong government proposed introducing its own bill to regulate crypto-related activities in the region. The Securities and Futures Commission of Hong Kong released a proposal for a regime for cryptocurrency exchanges on February 20, which is set to take effect in June. The new licensing regime will require crypto exchanges to obtain licenses from the Securities and Futures Commission and comply with regulations on KYC (know-your-customer), AML (anti-money laundering), and other areas.
Despite China’s ban on crypto-related activities, representatives from the China Liaison Office have reportedly been attending Hong Kong crypto gatherings. This could signal a shift in China’s approach to cryptocurrencies, as the country looks to tap into the growing market for digital assets.
The move by Chinese banks to offer banking services to crypto firms in Hong Kong also reflects a growing trend among traditional financial institutions to embrace cryptocurrencies. As more countries introduce regulations for crypto-related activities, financial institutions are starting to recognize the potential of digital assets and the need to integrate them into their existing systems. This move could help bridge the gap between the crypto industry and traditional finance, paving the way for greater adoption of cryptocurrencies.
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