Hong Kong’s Crypto Revolution: Billionaire’s Virtual Bank Takes Over

Hong Kong’s leading digital bank, ZA Bank, is venturing into the transfer of both cryptocurrency and traditional currency, aiming to cater to the growing digital asset industry in the city.

What Happened: Co-founded by Chinese billionaire Ou Yaping and others, the bank plans to facilitate token-to-fiat currency exchanges through licensed platforms, its CEO Ronald Iu told Bloomberg in an interview.

By acting as a settlement bank, ZA Bank will enable customers to withdraw funds in Hong Kong, China and U.S. currencies after depositing crypto tokens on exchanges.

Lu said this business model is already functioning with HashKey and OSL, the only two licensed crypto exchanges in Hong Kong at present.

The bank is also prepared to offer its services to other platforms as they become licensed.

“For the numerous interested companies, regardless of size, origin, or stature, their main concern is to find a way to make things work,” Iu said.

Despite facing challenges from Covid-19 restrictions and political turmoil, Hong Kong is striving to reclaim its status as a financial hub by embracing the digital asset sector.

Also Read: BRICS World Currency Takeover: Is This The End Of Traditional Money?

But accessing banking services has been a significant obstacle to the city’s aspirations. To address this, Hong Kong’s banking and securities regulators plan to organize a roundtable for crypto stakeholders and bankers to exchange insights on banking services later this month.

Additionally, the city aims to introduce a revised virtual asset exchange framework on June 1, allowing exchange operators to cater to retail investors.

Why It Matters: The downfall of Silicon Valley Bank has further diminished banking access for numerous crypto firms, as traditional banks are hesitant to offer services due to stringent know-your-customer (KYC) and anti-money laundering regulations.

ZA Bank is extending online account opening services to local Web3 startups and small to medium-sized enterprises after successfully trialing a regulatory sandbox that incorporated approximately 100 firms.

The bank’s alternate CEO Devon Sin said that ZA Bank has connected to the city’s company registry data, which enables minimal information input and verification.

ZA Bank currently plans to engage only with licensed exchanges and adhere to standard AML checklists to fulfill regulatory demands.

Sin noted no AML issues have arisen in recent months. The bank does not offer services to clients from mainland China due to existing restrictions, as stated by Iu.

ZA Bank, officially launched in March 2020, is one of Hong Kong’s eight licensed digital banks and accumulated the most net assets by the end of last year, despite not yet being profitable. 

Read Next: French Central Bank Set To Crush DeFi: Will New Crypto Laws Regulate Or Obliterate Decentralized Finance?

Photo: Shutterstock

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