In a move poised to accelerate local Web3 adoption, Hong Kong’s ZA Bank has announced it will offer dedicated banking services for stablecoin issuers.
According to the announcement on April 5, the Hong Kong-based virtual bank is opening up security for fiat reserves, which issuers can use to back digital assets.
Stablecoin issuers will also have access to banking services such as fund transfers, payroll management and various deposit options.
Devon Sin, the alternate chief executive of ZA Bank, said the institution 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."
Generally, for stablecoins to maintain their value, the issuer will need to securely store an equivalent amount of fiat currency, such as dollars, in fiat reserves. This ensures that holders can always redeem their stablecoins for the equivalent amount of the underlying fiat currency.
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However, managing these reserves securely has been challenging for stablecoin issuers, hindering wider adoption and creating a major need in the greater Web3 community.
ZA Bank has been actively trying to involve itself in Hong Kong’s burgeoning Web3 scene. In 2023, it reported over $1 billion in transfer volume from clients in the Web3 space.
In May 2023, it announced it would begin offering retail virtual asset trading in the administrative region, one day after the Hong Kong Securities and Futures Commission (SFC) said it would start accepting retail virtual asset trading platform (VATP) license applications.
The bank has since reportedly secured more than 80% of the client banking needs of the VATP in Hong Kong.
It also said it worked to onboard more than 100 Web3 companies in its efforts to push for local adoption.
In December 2023, the Hong Kong government announced that it would oblige stablecoin issuers to obtain licenses, according to a consultation paper from the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority.
The criteria for obtaining such a license will entail full backing of all circulating stablecoins with reserves “at least equal to the par value.”