Hong Kong-based crypto firms are seeking support from banks in mainland China amid the current crisis, according to a recent report.
In light of recent regulatory actions in the United States, crypto companies are looking for refuge overseas, with Hong Kong emerging to be the most friendly destination. Another report suggests that mainland Chinese banks have been offering support to Hong Kong crypto companies.
We noted last month that frequent trips by Chinese representatives to Hong Kong have been recorded. The most recent Bloomberg story indicates that Chinese banks have reached out to crypto companies directly in recent months.
Even though China has banned crypto trading on the mainland, it aims to make Hong Kong the crypto capital of Asia. The recent banking crisis and regulatory action in the United States have forced banks to reduce their support for crypto companies. This could be an opportune moment for Hong Kong to attract crypto companies seeking crypto-friendly zones.
Bloomberg stated, citing persons with knowledge of the situation, that “the Hong Kong divisions of Bank of Communications Co., Bank of China Ltd., and Shanghai Pudong Development Bank have either begun offering banking services to local cryptocurrency startups or have inquired into the industry.”
A sales representative from one of these banks has also visited the headquarters of a cryptocurrency company, according to one of the sources. A senior executive from a major Chinese bank with operations in Hong Kong stated that Beijing has approved the cryptocurrency push.
Industry Welcomes Chinese Banks’ Entry into Hong Kong
As a result of the recent events in the United States, participants in the crypto industry have been facing significant liquidity issues. The founder and CEO of beoble, Sung Min Cho, told Bloomberg:
The push by Chinese lenders “means a great deal to us since it’s something no one could have predicted at this time, even globally. A cryptocurrency account at a tradfi bank is a huge breakthrough.”
Yet, banking with crypto companies is not as simple as it sounds. The crypto industry’s anonymity and volatility have been a huge red flag for traditional companies.
Hong Kong-based virtual bank ZA Bank recently stated that they are willing to work with crypto companies that meet their internal and regulatory criteria. The CEO of ZA Bank, Devon Sin, stated that a pilot program for expedited business account openings has been launched.
Nevertheless, Hong Kong is not the only place where crypto companies are considering relocation. Some companies have also moved to Swiss banks in response to the recent downturn in the US banking sector.