Chinese state-owned banks step up to woo crypto firms
The Hong Kong banking industry looks to attract corporate crypto business in the wake of Operation Chokepoint 2.0.
On March 27, Changpeng Zhao (CZ) tweeted, “When one door closes, other ones open,” concerning the ongoing crypto cull by U.S. banks.
In this case, the open(ing) door is Chinese state-owned banks actively wooing crypto firms, per the Straits Times.
Operation Chokepoint 2.0
In recent weeks, U.S. regulators have filed multiple enforcement actions against crypto firms — raising suspicions of an attack on the industry. The matter became all the more evident earlier this month following several banking collapses and seizures.
Regulators seized Signature Bank on March 12 based on containing contagion spread. However, board member Barney Frank said the bank was sufficiently liquid — adding that the action was motivated by the intent to send “a very strong anti-crypto message.”
Several notable figures have since come forward echoing similar experiences at the hands of authorities — including Custodia Bank founder Caitlin Long. She spoke of coordinated actions to deny her firm a Fed master account and Federal Reserve System membership.
Castle Island Ventures Partner Nic Carter described Operation Chokepoint 2.0 as “a well-coordinated effort to marginalize the industry and cut off its connectivity to the banking system.”
The operation is essentially a war on crypto played out by a proxy attack via the banking system. Combined with enforcement actions from the securities regulator and U.S. crypto firms face an uncertain future.
However, despite the apparent attempt to stifle the U.S. crypto industry, Chinese banks are looking to fill the gap in a further nod to China’s reversal of anti-crypto sentiment.
Chinese banks welcome crypto firms
The Hong Kong branches of the Bank of Communications, Bank of China, and Shanghai Pudong Development Bank have begun offering banking services to cryptocurrency companies.
There are also reports of an active pursuit of crypto business, including instances of bank sales representatives visiting the offices of cryptocurrency firms to pitch their services.
Sung Min Cho, the founder of Beoble — a decentralized message app — said the change of tack by Chinese banks was unexpected.
“Means a lot to us because it’s something you’d never expect at this point, even around the globe.”
Due to global compliance procedures, including Know Your Customer (KYC) requirements, banks are generally guarded about accepting cryptocurrency businesses as customers. Some firms have reported experiencing flagged transactions and sudden account closures even after opening an account.
Although the Hong Kong banking industry provides varying experiences, depending on the institution, Sean Lee, the co-founder and Executive Director of Odsy Network, stated that the industry is still in a solid position to capitalize on the aftermath of Operation Chokepoint 2.0.