Hong Kong’s largest virtual bank, ZA Bank, plans to offer reserve services to stablecoin producers, aligning with the region’s new stablecoin licensing policy.
This development aligns with the city’s regulatory objectives and demonstrates a progressive approach to fusing cutting-edge financial technologies with conventional banking.
This new regulatory framework is a big step toward guaranteeing more stability and security in the digital asset market since it requires cryptocurrency stablecoin producers to deposit reserve assets in nearby banks.
According to local media, the first digital bank in Hong Kong to offer these services, ZA Bank, has acknowledged this in a statement released today. This represents a significant advancement at the nexus of financial technology innovation and traditional banking.
Services provided by reserve banks
Stablecoins’ growing significance in the global financial system necessitates that well-known financial institutions like ZA Bank offer robust reserve bank services to guarantee their stability and dependability.
The Hong Kong Monetary Authority (HKMA) has released the list of participants in the sandbox, and Yuancoin, working with ZA Bank, is one of the first participants.
By using these reserve bank services, Yuancoin has become the first stablecoin issuer of ZA Bank, demonstrating a noteworthy collaboration to foster innovation and improve the stability of digital assets.
Yao Wensong, CEO of ZA Bank, emphasized the need to offer banking services to stablecoin issuers, claiming that doing so combines fintech innovation with traditional banking. He added that their collaboration with Yuancoin shows a shared dedication to fostering creativity and strengthening the security of digital assets.
Compliance with HKMA regulations
The bank is in discussions with about ten other stablecoin businesses, suggesting possible collaborations and future projects. The bank has stated that it agrees with the HKMA’s regulations and is pleased that the developments have reached the sandbox phase.
In 2023 alone, ZA Bank processed over $1 billion in transactions for Web3 clients, demonstrating its commitment to growing its share of Hong Kong’s booming Web3 sector.
Just one day after the Hong Kong Securities and Futures Commission (SFC) declared it would begin accepting license applications for retail virtual asset trading platforms (VATPs), it announced plans to introduce retail virtual asset trading services in the area in May 2023.
Since entering the retail virtual asset trading sector, The bank has held over 80% of the client banking market share for VATPs in Hong Kong.
Concerns over investor safety and illegal platform operations led the Hong Kong Securities and Futures Commission to add seven unlicensed bitcoin trading sites to its alert list on July 15.
