Months after regulators laid down the blueprint to transform Hong Kong into a thriving hub for digital currencies, Chinese banks are jostling for a piece of the action behind the scenes.
Bloomberg reported that several Chinese banks have begun reaching out to digital currency companies looking to set up operations in Hong Kong to offer financial services. The banks named in the report include the Bank of China Ltd, Shanghai Pudong Development Bank, and the Bank of Communications.
While the Chinese banks are content to make subtle inquiries, some institutions have reportedly paid visits to the offices of digital currency firms to offer their banking services. The interest of Chinese banks in digital currency firms raised eyebrows within the industry as, back in 2021, the country imposed a blanket ban on the asset class.
A cross-section of stakeholders disclosed that they view the recent interest of Chinese banks with enthusiasm, but the hopes of China reversing its digital currency ban remain slim. Julia Pang, OSL’s head of banking relations, shared a similar sentiment, saying that the interest is positive for the long-term development of digital currencies.
“This development is encouraging for both the industry and the broader ecosystem, as it demonstrates a maturing understanding of the crypto sector by traditional financial institutions,” Pang said.
Chinese authorities have always paid close attention to Hong Kong’s digital currency ambitions, with officials from the China Liaison Office regularly attending industry events in the region. Given the free-hand approach, experts have commented that China might be using Hong Kong to experiment with the viability of having a thriving digital asset ecosystem.
Despite China’s ban on digital currencies, non-fungible tokens (NFTs) have continued to record impressive adoption metrics, with the Chinese courts conferring property rights on digital collectibles.
Building a digital currency paradise
In January, Hong Kong’s Financial Secretary Paul Chan disclosed extensive plans to allow international digital currency firms to set up regional offices. Chan added that the government would reduce the tax burden for the firms while easing the process to enable expatriates to obtain residency permits.
“We also welcome global financial technology and virtual asset communities and talents to develop in Hong Kong, and join us in embracing the huge opportunities brought about by the development of Web3 and the virtual asset industry,” Chan said.
The government confirmed that 23 firms are close to launching operations while 80 companies are mulling over the decision drawn by a clear regulatory framework and a favorable government stance.
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