According to a recent report from Bloomberg, Chinese banks are now showing interest in Hong Kong crypto firms. This has surprised the broader crypto community, given that China had once restricted digital currency transactions in the country.
In 2021, China imposed a strict law stating that anyone associating with these digital assets is at risk of going to jail. However, digital currency transactions in Hong Kong have risen despite China’s regulatory challenges. Several companies are even leveraging the city’s position due to its proximity to mainland China and as a financial hub.
Hong Kong Digital Asset Firms Drawing The Attention Of Chinese Banks
The report revealed the major financial institutions in the category, which include Bank of China Ltd., Bank of Communication Co., and Shanghai Pudong Development Bank, are either offering their services to digital currency firms or showing interest in providing financial services to them.
It also cited that some of the banks’ representatives have already taken a step further to visit the main office of a crypto firm, which comes as China tightens its restrictions on cryptocurrency trading and mining activities.
While it is still unclear how these potential partnerships would work in practice, it is believed that Hong Kong’s more liberal regulatory environment could make it an attractive location for Chinese banks looking to explore cryptocurrency.
Meanwhile, Julia Pang, head of banking relations at OSL, a Hong Kong-based digital asset trading platform, stated that her company welcomes interest and partnership with Chinese banks.
She added that the latest development encourages a good level of understanding between digital asset companies and traditional financial institutions.
As the crypto market continues to evolve, it’ll be interesting to see how the partnership between Hong Kong-based digital asset firms and Chinese banks will grow, including its impact on the broader industry.
Crypto Transactions In Hong Kong
Digital currency dealings in Hong Kong have been ongoing for several months. This is evident from a bill the city released in October 2022, stating the regulation of digital assets.
Aside from the bill, the city’s Securities and Futures Commission also released a proposal on February 20, regarding the regulation of digital currency trading platforms. The report revealed that this move would begin in June 2023.
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This will allow retail investors to trade some virtual assets with large market caps on licensed and regulated exchanges. Although the commission failed to note which tokens it will allow, it’s possible the board is referring to Bitcoin and Ethereum.
This move could restore the country’s web3 blockchain enterprises that gave up their local market and concentrated on international trading centers.
Some firms considered more profitable locations, such as Dubai and Singapore. But with the latest development in Hong Kong, these enterprises may bring their crypto dealings back home.
Featured image from Pixabay and chart from Tradingview.com
