- Chinese state-owned banks, including Bank of Communications, Bank of China, and Shanghai Pudong Development Bank, are offering support to Hong Kong’s crypto industry by providing banking services to local crypto firms. This move indicates Beijing’s backing for Hong Kong’s ambition to become a major digital asset center.
- Crypto firms have faced significant challenges in securing banking services due to the anonymous nature of digital assets and the traditional banking sector’s emphasis on KYC procedures. The involvement of Chinese banks comes at a crucial time, following the collapse of several US tech banks that previously served the crypto sector.
- Hong Kong’s banking system is gradually becoming more open to the crypto industry, with the Hong Kong Monetary Authority establishing a dedicated team to address inquiries from the virtual asset sector. However, geopolitical concerns might impact non-Asian projects’ willingness to work with Chinese banks.
Banking Hurdles for Crypto Firms
Banking for crypto businesses has been difficult due to the anonymous nature of digital assets, which raises red flags for traditional banks that prioritize know-your-client (KYC) procedures. It typically takes three months for crypto-focused companies to secure a corporate bank account, compared to just one month for non-crypto firms. Traditional banks have been hesitant to help transfer tokens to fiat currencies, forcing many crypto firms to rely on foreign banks or alternative solutions.
The Need for a Supportive Environment
Crypto industry insiders believe that local banks should implement trial programs to support digital asset firms and professionals who understand their unique environment. A more welcoming landscape would encourage startups to develop within the sector. However, the conflict between the government’s push for industry development and the banking system’s hesitance to provide services to crypto firms remains a challenge.
Changpeng Zhao, the head of Binance exchange and commonly known as CZ to a vast number of crypto users, shared his thoughts on the recent news via his Twitter page. He mentioned that when one door shuts, new ones start to open, alluding to the collapse of several prominent U.S. banks that were previously supportive of the crypto industry.
Prospects for Hong Kong’s Crypto Industry
Despite these obstacles, there is a general consensus that Hong Kong banks have become more open to crypto firms in recent years. The Hong Kong Monetary Authority has a dedicated team that addresses inquiries from the virtual asset industry regarding bank account opening and maintenance. As a result of the banking failures in the US, Hong Kong is well-positioned to benefit from capital inflows, but geopolitical concerns might deter non-Asian projects from banking with Chinese institutions.
Suggested Reading :
- Why more than 80 Crypto Companies Flocking to Hong Kong?
- Hong Kong plans to make crypto purchase and trading legal for all of its citizens
- Fidelity-backed Crypto Trading Platform OSL is Finally Legal in Hong Kong
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