Hong Kong-based ZA Bank, which is the city’s largest virtual-only lender, is planning to expand its business into the digital assets sector. The platform will offer crypto-to-fiat conversions and account services, as Hong Kong aims to embrace the crypto industry.
ZA Bank aims to facilitate transfers of digital and fiat currencies for participants in the city’s developing crypto sector. The virtual bank will offer crypto-to-fiat currency conversions through licensed exchanges, acting as a settlement bank for clients who deposit digital coins to the trading platforms and want to withdraw Hong Kong and US dollars or Chinese yuan. CEO Ronald Iu stated that ZA Bank is working with the two currently authorized crypto exchanges in Hong Kong, Hashkey and OSL, and intends to provide the service to others as more platforms obtain a license to operate in China’s special administrative region.
Hong Kong has been opening up to the crypto space, despite its recent troubles, with the goal of becoming a crypto hub. The city is seeking to revive its status as a global financial center. There have been signs that Hong Kong’s push into the crypto market has the support of Beijing, despite the crackdown on crypto activities in the mainland. A report revealed in late March that state-owned Chinese banks are ready to serve crypto companies in the city. One of China’s largest insurers backed the launch of two crypto-focused funds in early April.
Hong Kong authorities are now working to revamp the legal framework for cryptocurrency exchanges in order to allow them to open to retail investors. The region’s financial regulators are also taking steps to improve access to banking services for crypto companies. Currently, ZA Bank plans to engage only with licensed digital asset exchanges. It’s conducting anti-money laundering (AML) checks in compliance with existing requirements and has not had any AML issues over the past months, according to its Alternate Chief Executive Devon Sin.
The virtual bank is also opening online accounts for Web3 startups and other small and medium enterprises. Around 100 such companies have access to its services following a trial in a regulatory sandbox.
It remains to be seen whether Hong Kong will continue to improve access to banking services for crypto companies, but the city’s recent moves suggest that it is keen to embrace the industry.