Hong Kong’s ZA Bank has revealed plans to provide professional banking services to stablecoin issuers, a strategy expected to drive local web3 adoption.
The Hong Kong-based virtual bank confirmed on April 5 that it is opening up its security to fiat reserves that issuers can use to back digital assets.
Stablecoin issuers also have access to banking services such as fund transfers, payroll management, and various deposit options.
ZA Bank’s alternate CEO Devon Sin said the bank had “firm support” for the web3 community.
“With these new services, we are directly addressing the unique challenges facing stablecoin issuers and ultimately driving growth and stability within the web3 economy,” Sin said.
For a stablecoin to maintain its value, the issuer must hold that amount of fiat currency, such as dollars, in safe reserves. This ensures that stablecoin holders can redeem their digital assets at the same value as the underlying fiat currency.
Nonetheless, stablecoin issuers have had difficulty managing these reserves safely. This hindered widespread adoption and created a serious void in the web3 community as a whole.
ZA Bank has been making a concerted effort to participate in Hong Kong’s fast-growing Web3 scene. It reported that client transfer volume in the Web3 segment exceeded $1 billion in 2023.
ZA Bank has revealed plans to offer retail virtual asset trading services in Hong Kong, after the Hong Kong Securities and Futures Commission (SFC) announced it would accept license applications for a retail virtual asset trading platform (VATP) in May 2023.
Since then, the bank has reportedly implemented more than 80% of its VATP for Hong Kong customers’ banking requirements. It also said it has recruited more than 100 web3 companies as part of its efforts to drive local adoption.
The Hong Kong government announced that stablecoin issuers will be required to obtain licenses in December 2023, according to a consultation document between the Department of Financial Services and the Treasury and the Hong Kong Monetary Authority.
To qualify for these licenses, issuers must guarantee full support for all stablecoins in circulation with reserves “at least equal to their face value.”