Chinese banks are seizing the opportunity to support the burgeoning cryptocurrency market in Hong Kong, despite mainland China’s stringent restrictions on crypto-related activities. Hong Kong’s government aims to establish the city as a prominent crypto hub, attracting interest from state-affiliated banks in China eager to collaborate with regulated crypto companies.
The Hong Kong division of the state-owned Bank of Communications is partnering with registered cryptocurrency businesses in the city, with discussions underway to open accounts for these regulated firms. Additionally, ZA Bank, Hong Kong’s largest virtual bank and a subsidiary of Chinese internet insurer ZhongAn Online P&C Insurance, will act as the settlement bank for crypto companies. These banks will facilitate fiat currency deposits and withdrawals for the growing number of cryptocurrency businesses in the region.
Chinese banks are not only providing account services to these crypto enterprises but also serving as settlement banks for authorized exchanges, enabling token deposits to be withdrawn in Hong Kong dollars, Chinese yuan, and U.S. dollars. This move aligns with Hong Kong Financial Secretary Paul Chan’s announcement earlier this year that the city plans to collaborate with more cryptocurrency firms throughout 2023. Consequently, nearly 80 crypto companies have expressed interest in launching or expanding operations in Hong Kong.
Furthermore, the Chinese government-backed CPIC Investment Management, the second-largest insurance firm in mainland China, recently launched two crypto funds targeting institutional investors. This development underscores China’s growing interest in the cryptocurrency sector through its involvement in Hong Kong, despite the country’s history of crackdowns on crypto-related activities within mainland China.