- ZA Bank in Hong Kong is discussing establishing cash reserve accounts with potential stablecoin issuers.
- A ZA Bank executive disclosed engaging with about eight prospective corporate clients exploring stablecoins.
- The HKMA has initiated accepting applications for trials concerning stablecoin issuance.
ZA Bank in Hong Kong is currently in discussions with potential stablecoin issuers regarding establishing accounts for the cash reserves supporting these tokens. Details of this development were captured by Bloomberg, citing Devon Sin, General Manager of Business Banking & Lending at ZA Bank.
Devon Sin revealed that the digital bank is engaging with approximately five to eight prospective corporate clients, both existing and new, who are exploring the possibility of launching stablecoins. Upon official admission to a regulatory sandbox by the Hong Kong Monetary Authority (HKMA), these clients will be provided with fiat reserve accounts.
During an interview, Sin highlighted the diverse applications of stablecoins, ranging from wholesale and retail markets to tokenization and overseas remittance solutions. “We are keen to explore how to put them into real-world use with the potential issuers,” the bank executive added.
Devon Sin mentioned that ZA Bank will contemplate offering custody services for virtual assets, including stablecoins, and will explore the necessary infrastructure requirements.
Following a notable presentation to the Web3 sector by ZA Bank, addressing grievances regarding limited banking services, Sin stated that the bank has facilitated transfers exceeding $1 billion from over 100 Web3 clients. Meanwhile, as of 2022, the eight virtual banks licensed in Hong Kong have reported losses in their annual reports. However, according to Sin, ZA Bank aims to achieve break-even status this year.
Notably, Hong Kong is actively striving to cultivate a digital asset hub to revive its status as a prominent financial center. Recently, the city granted licenses to its inaugural cryptocurrency trading platforms under updated regulations. Last December, Hong Kong regulators disclosed their readiness to list spot crypto exchange-traded funds (ETFs).
Also, the HKMA is formulating a framework tailored for stablecoins pegged 1:1 to fiat currencies, typically supported by cash and bond reserves. Since last month, the HKMA has initiated accepting applications for trials concerning stablecoin issuance. As of April 3, no projects had commenced.
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