Despite China's continuing prohibition on cryptocurrency activities, major Chinese institutions are allegedly offering financial services to Hong Kong-based cryptocurrency businesses. The business and the larger environment are viewed as benefiting from the unanticipated assistance. Banks like the Bank of Communications, Shanghai Pudong Development Bank, and the Bank of China have either begun to give financial services or have contacted cryptocurrency companies in Hong Kong. Major lenders had previously shunned the cryptocurrency market, crippling businesses that couldn't dependably access financial services. The action by Chinese institutions is important because it coincides with the continuing mainland Chinese prohibition on cryptocurrencies.
Industry Experts React
Industry professionals have praised the decision made by Chinese institutions. It is “encouraging for both the industry and the broader ecosystem,” according to Julia Pang of the cryptocurrency exchange site OSL. Web3 company “beoble” creator Sung Min Cho said the attention was significant because “it's something you'd never expect at this point, even around the world.” This unanticipated support from Chinese institutions is a significant development for the cryptocurrency market in Hong Kong and may open the door for further expansion.
Policy Shift Expected Later This Year
The action by Chinese institutions follows a regulatory change anticipated later this year. The Hong Kong government declared in October 2022 that it might propose a law to control cryptocurrency transactions. The Hong Kong Securities and Futures Commission (SFC) opened comments on February 20, 2023, for new rules on cryptocurrency operations that go into force on June 1st. According to the suggested rules, cryptocurrency businesses must apply for a license from the SFC in order to function in Hong Kong. Chinese banks' decision to back Hong Kong-based cryptocurrency companies is viewed as important because it occurs before the anticipated policy change.
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