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(Kitco News) - ZA Bank, Hong Kong’s largest virtual bank by assets, has begun offering cryptocurrency account services for crypto firms and added support for crypto-to-fiat exchanges for the city’s growing digital asset economy.
According to a report from Bloomberg, ZA Bank intends to offer token-to-fiat currency conversions for licensed exchanges and will act as a settlement bank for clients to enable withdrawals in Hong Kong dollars, Chinese yuan, and U.S. dollars for those who deposit crypto tokens onto supported exchanges.
Ronald Iu, CEO of ZA Bank, told Bloomberg that the business model is already operational at the two licensed crypto exchanges in Hong Kong – HashKey and OSL – and the bank plans to extend the service to additional exchanges as they become licensed. “For the dozen of interested firms, big or small, from abroad and local, top of their concern is to have a path to make things work,” said Iu.
Iu noted that due to regulatory restrictions, the bank does not offer services to clients from mainland China.
On the heels of a successful trial in a regulatory sandbox that managed to onboard 100 firms, ZA Bank now plans to offer online accounts for all interested local Web3 startups and small-medium enterprises.
The move to incorporate crypto services comes as the bank, which was originally launched in March 2020, looks to increase its revenue as it remains unprofitable more than three years after its debut. “It’s too early to say what the revenue model is here,” said Iu. “More clients, more deposits, more business opportunity is always great for the bank.”
According to Devon Sin, alternate chief executive of ZA Bank, the bank plans to focus its engagement efforts on licensed exchanges and conducts AML scrutiny against the usual checklists to satisfy regulatory requirements. Thus far, no AML issues have arisen, Sin said.
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This development comes as the government of Hong Kong has been ramping up its efforts to become a regional cryptocurrency hub following years of Covid restrictions and political upheaval.
Access to banking has been one of the major roadblocks in helping the city achieve its goals, and this appears to be a first step in attempting to address that issue. Hong Kong’s banking and securities regulators also plan to host a roundtable for crypto players and bankers later this month, where they can share their experiences and perspectives on Hong Kong banking services.
In February, the Hong Kong Securities and Futures Commission (SFC) launched a public consultation period seeking comments on its plans to legalize crypto tracking and the proposed requirements for operators of virtual asset trading platforms. The comment period closed on March 31, and the government intends to roll out the new licensing regime on June 1, which will allow exchange operators to serve retail investors.
