Hong Kong’s drive to become a cryptocurrency hub has opened an opportunity not only for cryptocurrency companies, but also for many state-affiliated banks in China. Chinese banks have shown interest in forming partnerships and incorporating Hong Kong-regulated cryptocurrency companies, despite a general ban on cryptocurrency-related activities in mainland China.
The Hong Kong arm of China’s major state-owned bank Bank of Communications is collaborating with several cryptocurrency companies registered in the city. The bank is in talks to open accounts to regulated companies, according to a note published in The Wall Street Journal.
In addition to Bank of Communications, ZA Bank – Hong Kong’s largest virtual bank controlled by Chinese internet insurer ZhongAn Online P&C Insurance – will also act as a settlement bank for cryptocurrencies. The banks will jointly facilitate the deposit and withdrawal of fiat currencies.
In addition to offering account services to cryptocurrency companies, these banks will act as settlement banks to allow deposit tokens on authorized exchanges to be withdrawn in Hong Kong dollars, Chinese yuan and US dollars.
Earlier this year, Hong Kong’s finance secretary Paul Chan clarified that the city is pushing to collaborate with more crypto companies in 2023. As a result of the government’s progressive approach to cryptocurrencies, almost 80 cryptocurrency companies have shown interest in opening or expanding their operations in the city. The government push into cryptocurrency has attracted some surprising allies in the form of Chinese banks and funds.
As Cointelegraph reported, in addition to adding cryptocurrency companies and opening bank accounts for regulated companies, the Chinese government-backed CPIC Investment Management launched two cryptocurrency funds. CPIC is the second largest insurance company in mainland China, and its new cryptocurrency funds are focused on institutional investors.
China’s growing interest in crypto through Hong Kong has surprised many in the crypto ecosystem, as the country has carried out multiple crackdowns on crypto-related activities in mainland China.