Hong Kong’s ZA Bank revealed plans to provide specialized banking services for stablecoin issuers, a strategy it expects to boost local web3 adoption.
The Hong Kong-based virtual bank confirmed on April 5 that it is opening up security for fiat reserves, which issuers can use to back digital assets.
Additionally, banking services such as fund transfers, payroll administration, and a variety of deposit options will be available to issuers of stablecoins.
ZA Bank alternate chief executive Devon Sin stated that the bank has “unwavering support” for the web3 community:
“With these new services, we’re directly addressing the unique challenges faced by stablecoin issuers, ultimately promoting growth and stability within the web3 economy,” Sin said.
To ensure stablecoins retain their value, issuers must hold a corresponding amount of fiat currency, like dollars, in secure reserves. This guarantees that stablecoin holders can redeem their digital assets for the same value in the underlying fiat currency.
Nonetheless, stablecoin issuers have encountered difficulties in securely administering these reserves. This has impeded widespread adoption and created a significant void across the web3 community.
ZA Bank has made a concerted effort to participate in the rapidly expanding web3 scene in Hong Kong. It reported an excess of $1 billion in client transfer volume in the web3 sector in 2023.
Following the Hong Kong Securities and Futures Commission’s (SFC) announcement to accept license applications for retail virtual asset trading platforms (VATP) in May 2023, ZA Bank revealed its plans to offer retail virtual asset trading services in Hong Kong.
Since then, the bank reportedly fulfilled over 80% of the VATP in Hong Kong’s client banking requirements. Additionally, it stated that it had recruited over a hundred web3 companies as part of its drive for local adoption.
Stablecoin issuers will be required to obtain licenses, the Hong Kong government announced in December 2023, according to a consultation document from the Financial Services and Treasury Bureau and the Hong Kong Monetary Authority.
In order to qualify for such a license, the issuer must guarantee the complete support of all circulating stablecoins with reserves that are “at least equal to the par value.”