State-owned Chinese banks offer financial services to Hong Kong digital asset firms

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Several state-owned Chinese banks have indicated a keen interest in onboarding licensed digital currency service providers in Hong Kong to take advantage of the growing list of potential clientele in the industry.

The renewed efforts are coming on the heels of Hong Kong’s regulators pulling strings to attract global firms to the region after a rough couple of years. The Chinese state-owned Bank of Communications is reportedly in discussion with some digital asset firms in Hong Kong to offer them various banking services.

The Bank of Communications offers several industry players in Hong Kong with deposit accounts to support their daily transaction needs, like paying salaries and purchasing office supplies. Other banking institutions are upping the ante by providing digital asset trade-settlement services that experts have deemed risky for Web3 firms.

ZA Bank, the largest digital bank in Hong Kong with extensive ties to China, also offers settlement services for withdrawing and depositing fiat currencies in U.S. dollars, Chinese yuan, and Hong Kong dollars.

Since the start of the year, Chinese banking officials have been spotted at Hong Kong’s digital currency banking events, hinting at readiness to wade into the industry. It was widely reported that some state-owned Chinese banks have sent representatives to the offices of digital currency providers as the race for their signature heats up.

Chinese regulators banned digital currency activity in mainland China that precluded banks from settling digital asset transactions. However, legal analysts have noted that the restriction does not prevent Chinese institutions from offering services to Web3 firms in Hong Kong.

Hong Kong’s Financial Secretary Paul Chan revealed that over 80 foreign digital currency service providers had indicated a strong interest in setting up offices in the country. The firms are drawn by the prospects of clear regulations and a concerted government effort to transform the region as the leading hub for digital assets.

US banking collapse fuels Chinese banks’ drive

The implosion of Silvergate (NASDAQ: SI), Silicon Valley Bank (SVB), and Signature Bank sent shockwaves around the digital currency industry. Right out of the gate, the collapses severely limited the banking options of Web3 companies globally and firmed the resolve of traditional banks to stay away from digital assets.

With a large number of digital asset firms in limbo over the banking options, Hong Kong and Chinese banks are scrambling to fill the growing void left in the wake of the collapses. Rather than viewing Chinese incursion in Hong Kong’s markets with skepticism, industry players are praising their banking offers, saying it is healthy for the ecosystem.

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