- Mainland China, through the People’s Bank of China, banned virtual currency-related business activities in 2021.
- However, Chinese residents have reportedly been using VPN to access Web3 projects like Binance and invest in Bitcoin, among other crypto assets.
The Hong Kong digital asset adoption strategy could push Mainland China into easing crypto trading restrictions in the near future. By now, it is safe to bet that the ongoing global banking crisis and the high inflation are bound to push countries worldwide to adopt deflationary assets like Bitcoin, among other crypto assets. Notably, Hong Kong plans to introduce new rules in June that require crypto trading platforms to be licensed by the Securities and Futures Commission.
As a result, the Hong Kong arms of Bank of Communications Co., Bank of China Ltd. and Shanghai Pudong Development Bank have either started offering banking services to local crypto firms or have made inquiries into the field. According to a report by Bloomberg, sales representatives from one Chinese bank visited the office of a crypto company to pitch its services.
Reportedly, a top executive at a branch of a major Chinese bank in Hong Kong stated that the crypto push and the uncertain local lending situation, among other factors, have offered an opportunity to explore the cryptocurrency market.
“It would be great if local banks could start some trial program to support crypto firms and more professional service providers that understand our native environment,” said Dominic Law, chief Metaverse officer of Neopets Metaverse, a game backed by Chinese firm NetDragon Websoft Holdings Ltd. “The business landscape would certainly be more welcoming and easier to support more startups to develop in this field.”
Can China Fuel the Next Bull Rally?
Mainland China, through the People’s Bank of China, banned virtual currency-related business activities in 2021. However, Chinese residents have been devising alternative ways to invest in blockchain technology through unorthodox methods. For instance, a recent report showed that Chinese residents are ready to use VPN and fake proof of residence to verify Binance’s Know Your Customer (KYC) feature.
Nonetheless, a direct relationship between Mainland China banks and Hong Kong’s crypto startups could help scale mainstream adoption in the eastern Asian market. Moreover, the recent failure of crypto-related banks in the United States including Silicon Valley Bank (SVB) and Signature Bank has increased banking migration from the west to Asian markets from local hedge funds.
As a result, the banking sector in Hong Kong is expected to significantly benefit from the positive crypto regulatory landscape in the region. Furthermore, banks in Hong Kong are well-positioned to tap into the capital inflows following the banking failures in the US.
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The Bitcoin market has rallied before with negative sentiments from Mainland China. With Bitcoin halving exactly a year from now, a positive crypto regulatory landscape from Eastern Asia could be a huge catalyst for the industry.
Bitcoin price is exchanging around $28k on Monday, having consolidated in the past week.
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