Singapore bank eyes acquisition; ZA Bank launches mobile asset trading

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Financial institutions in Asia are gradually embracing digital assets amid stringent regulations, with Singapore Gulf Bank seeking funds to acquire a stablecoin payments company as part of its expansion plans and Hong Kong’s ZA Bank introducing digital asset trading on its mobile platform.

According to a Bloomberg report, the digital bank is seeking up to $50 million to complete the purchase of the stablecoin firm. The report states that the financial institution is willing to sell an equity stake of around 10% to raise funds for the acquisition, with sources hinting at a timeline for 2025.

The bank, owned by the Whampoa Group, has received an operational license in Bahrain since 2021 and may be seeking to deepen its reach in the region. Persons with direct knowledge of the matter opine that Singapore Gulf Bank has its eyes peeled on a stablecoin firm domiciled in the Middle East.

The firm is reportedly looking for enterprises that meet its stringent requirements, with a source hinting at a potential European acquisition.

Internally, plans to sell a stake in the company to finance the purchase are at an advanced stage with a pool of investors. Bloomberg notes that an unnamed Middle East sovereign wealth fund is leading the charge while other investors are waiting for an entry strategy.

The sale of the company’s stake will provide the needed capital injection to power the digital bank’s expansionist objectives. An unnamed source says some of the funds will bolster the bank’s staff while others will be deployed to improve its existing payments network.

If things go according to plan, the Singapore Gulf Bank will complete the purchase of a stablecoin payments company before the end of the first quarter of 2025.

From a bird’s-eye view, there are several reasons why a digital bank would want to purchase a stablecoin company. For starters, the Singapore Gulf Bank may be finding ways to improve its cross-border settlement capabilities while optimizing regional liquidity. Other reasons include the potential of access to new markets and the prospects of achieving regulatory compliance in a new jurisdiction.

Focusing on the Middle East

The Middle East is galloping toward full-scale digital asset adoption, outpacing the trajectory of advanced economies to become a powerhouse in its own right. Buoyed by the United Arab Emirates, Bahrain, and Saudi Arabia, the region has seen investment in digital assets and blockchain technology reach new highs.

In the Middle East and North Africa region, the UAE has emerged as the industry leader for digital assets, recording a 42% growth over a 12-month period. According to a Chainalysis report, the Middle East achieves its growth metrics from a combination of clear regulations, a positive government stance, and easy licensing procedures for service providers.

ZA Bank records milestone

Hong Kong-based ZA Bank has made history by becoming the first Asian bank to allow customers to trade digital currencies in its mobile banking app.

In a company statement, ZA Bak said users can now trade digital assets on the mobile app without relying on third-party websites or mobile applications. This move makes ZA Bank the first digital bank in Asia to provide retail digital asset trading for customers, meeting stringent regulatory requirements.

The company turned to local digital asset exchange HashKey for technical direction, leveraging the latter’s HashKey Pro, its institutional-grade custody service, for a successful launch. HashKey Pro allows financial institutions to offer clients digital asset trading services without breaking the bank.

HashKey will provide ZA Bank with a suite of solutions, including API trading, permission management, and block trade capabilities within the confines of financial regulations. HashKey is one of three digital asset service providers approved by the Hong Kong Monetary Authority (HKMA) to operate in the region.

“The rise of cryptocurrency presents investors with more diverse asset allocation opportunities,” said alternative CEO of ZA Bank, Calvin Ng. “As a bank, we prioritise security and compliance, which is why we’ve partnered with HashKey, a global-leading licensed virtual asset exchange, to meet regulatory standards and deliver bank-grade security in virtual assets trading – our key competitive advantage in the Asian market.”

The novel offering will allow users to trade approved digital assets in U.S. dollars (USD) or Hong Kong dollars (HKD) with additional perk custodial capabilities. However, given the HKMA’s standards, users of the platform will be limited to only BTC and Ethereum (ETH).

“Through the ZA Bank app, users can now seamlessly trade top cryptocurrencies in HKD and USD—all within a single platform, with no need to switch between apps or platforms,” said ZA Bank.

ZA Bank’s foray follows a survey by the Hong Kong Association of Banks, which hinted at the rise of digital banks in the digital currency ecosystem. Seventy percent of respondents claimed that digital banks offering digital currency trading will spur greater adoption rates while protecting investors from unlicensed offerings.

Blazing a trail

Hong Kong is setting the pace for Web3 in South Asia, growing by leaps and bounds in recent months. After rolling out water-tight regulations for the ecosystem, Hong Kong has since recorded an avalanche of firms seeking to set up regional operations.

Its Cyberport initiative currently houses over 250 Web3 firms, including three unicorns, with several foreign startups knocking on the door. While several reasons can be deduced for Hong Kong’s remarkable success with digital assets, a key factor lies in the fledgling ecosystem’s positive government stance and capital injection.

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