ZA Bank in Hong Kong is in talks with potential stablecoin issuers to provide fiat reserve accounts for backing tokens as part of the city’s push to become a digital asset hub.
Hong Kong’s virtual banking sector aims to expand into the rapidly growing stablecoin market. ZA Bank, a prominent virtual lender, is negotiating with potential stablecoin issuers to open accounts in Hong Kong to hold their reserve funds. ZA Bank’s move shows its goal to become a major participant in Hong Kong’s ambitions to establish itself as a digital asset hub.
“Stablecoin use cases are very diverse,” said Devon Sin, Alternate Chief Executive of ZA Bank, in a recent interview.
“We are keen to explore how to put them into real-world use with the potential issuers.”
Sin highlighted stablecoins’ extensive usability, including wholesale and retail transactions, tokenization processes, exchange settlements, and streamlining cross-border remittances with ease.
The ZA Bank is currently negotiating with between five and eight existing and new corporate clients regarding the issuance of stablecoins. These clients would qualify for fiat reserve accounts upon achieving regulatory approval from the Hong Kong Monetary Authority’s (HKMA) recently launched sandbox initiative.
HKMA Initiates Stablecoin Regulations
Hong Kong financial regulators actively encourage digital asset ecosystem expansion in the city. In 2023, the HKMA issued inaugural crypto trading platform licenses under new regulatory guidelines. Moreover, Hong Kong is open to listing spot exchange-traded funds (ETFs).
A key factor in this approach involves creating guidelines for stablecoins – cryptocurrencies typically pegged 1:1 to a fiat currency, frequently backed by cash and bond reserves, offer relative stability compared to other digital assets. Currently, Hong Kong’s monetary authority is crafting regulations governing stablecoin issuance in Hong Kong.
While offering savings accounts marks an essential start, ZA Bank investigates deeper engagement with stablecoins. Sin pointed out the bank’s consideration of custody services for virtual assets like stablecoins. However, Sin acknowledged the necessity to construct the necessary infrastructure to support such offerings effectively.
ZA Bank Leads Web3 Sector with $1B Transfers
ZA Bank’s strive to serve the Web3 community, a sector heavily dependent on cryptocurrencies and blockchain technologies, appears fruitful. Since its focused initiative towards this domain, the bank has facilitated over $1 billion in transfers from over 100 Web3 clients. Web3 offers a decentralized, blockchain-driven vision for the internet’s future.
ZA Bank’s strategic move focuses on profitability and digital asset innovation, setting it apart in Hong Kong’s virtual banking landscape. While virtual banks struggled with losses in 2022, ZA Bank strives to achieve fiscal sustainability this year. Meanwhile, its dedication to advancing digital asset solutions solidifies its key role in achieving Hong Kong’s digital asset ambitions.
next