Chinese state-owned banks step up to woo crypto firms
On March 27 Changpeng Zhao (CZ) tweeted, “When one door closes, another opens“, regarding the ongoing crypto culling of US banks.
In this case, the open door is Chinese state-owned banks actively courting crypto firms, according to the Straits Times.
Operation Chokepoint 2.0
In recent weeks, US regulators have filed several enforcement actions against crypto firms – raising suspicions of an attack on the industry. The matter became all the more clear earlier this month after several bank collapses and seizures.
Regulators seized Signature Bank on March 12 based on containing the spread of infection. However, board member Barney Frank said the bank was sufficiently liquid – adding that the action was motivated by the intention to send “a very strong anti-crypto message”.
Several notable figures have since come forward to reflect similar experiences at the hands of the authorities – including Custodia Bank founder Caitlin Long. She spoke of coordinated actions to deny the firm a Fed main account and membership in the Federal Reserve System.
Castle Island Ventures partner Nic Carter described Operation Chokepoint 2.0 as “a well-coordinated effort to marginalize the industry and cut its connection to the banking system.”
The operation is essentially a war against crypto played out by a proxy attack via the banking system. Combined with enforcement actions from the securities regulator and US crypto firms, an uncertain future is looming.
Despite the apparent attempt to stifle the US crypto industry, Chinese banks are trying 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 Bank of Communications, Bank of China and Shanghai Pudong Development Bank have started offering banking services to cryptocurrency companies.
There are also reports of an active pursuit of crypto business, including cases of bank sales representatives visiting the offices of cryptocurrency firms to pitch their services.
Sung Min Cho, the founder of Beoble – a decentralized messaging app – said the move by Chinese banks was unexpected.
“Means a lot to us because it’s something you would never expect at this point, even around the world.”
Due to global compliance procedures, including Know Your Customer (KYC) requirements, banks are generally guarded about accepting cryptocurrency businesses as clients. Some firms have reported experiencing flagged transactions and sudden account closures even after opening an account.
Although the banking industry in Hong Kong offers varying experiences depending on the institution, Sean Lee, co-founder and CEO of Odsy Network, stated that the industry remains in a solid position to capitalize on the aftermath of Operation Chokepoint 2.0.
However, Lee pointed out that geopolitical uncertainty remains a stumbling block in attracting “non-Asian projects to bank with Chinese banks.”
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