Chinese banks going all in on crypto amid US financial crisis
Although crypto trading has been outlawed on the mainland for years, Chinese banks have reached out directly to crypto firms in recent months, adding to evidence that Hong Kong’s desire to become a significant digital asset hub has support from Beijing.
Bank of Communications Hong Kong, Bank of China Hong Kong, and Shanghai Pudong Development Bank Hong Kong have all reportedly begun providing banking services to local crypto companies or made inquiries into doing so.
At least one source has confirmed that sales staff from a Chinese bank have personally visited a cryptocurrency firm’s headquarters to drum up business for the institution, as reported by Bloomberg.
The olive branch is significant since traditional financial institutions have avoided the industry, making it impossible to get essential banking services like establishing an account to pay employees and suppliers. This comes as Hong Kong continues to thrive as a crypto hub.
U.S. bank crisis driving China into crypto
With the demise of three central U.S. technology banks, Silicon Valley Bank (SVB), Silvergate Capital, and Signature Bank, now is an excellent opportunity for these lenders to step in and help fill the resulting hole.
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Mr. Sung Min Cho, founder, and CEO of beoble, a supplier of a messaging system for decentralized apps, said the effort by Chinese lenders “means a lot to us since it’s something you’d never imagine at this stage, even throughout the world.”
“Having an account for cryptocurrencies at a TradFi bank is quite revolutionary.”Sung Min Cho, CEO of beoble.
What makes it so hard to have crypto-friendly banks?
It has always been challenging to open a bank account for a crypto company.
Traditional banks have been wary of it due to the lack of transparency that comes with its anonymity. Cryptocurrency businesses in Hong Kong that requested anonymity said they had to resort to several creative measures to satisfy their operational banking requirements.
Crypto-centric businesses may need up to three months longer than traditional businesses to get a corporate bank account. As a result, businesses often evaluate offers from a dozen or more financial institutions before deciding on one.
Financial institutions often detect transactions involving digital asset businesses and may abruptly terminate accounts following a warning phone call.
Cryptocurrency token traders have it much more challenging. Several people have looked to crypto-friendly banks overseas, such as Signature or alternatives in Switzerland and the Middle East, since almost no domestic banks assist in converting tokens to fiat currency.
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