The Hong Kong-based virtual bank ZA Bank confirmed that it is making available securities 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.
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.
However, stablecoin issuers have faced notable challenges in securely managing and administering these reserves. This obstacle has not only slowed down the widespread adoption of stablecoins but has also created a significant void within the web3 community, impacting its overall development and growth trajectory.
ZA Bank has made a concerted effort to participate in the rapidly expanding web3 scene in Hong Kong. It reported an excess of USD 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.’
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