Hong Kong’s largest digital bank ZA Bank has announced that it will offer customers digital currency conversion services as the city leaps to attract global firms.
According to a Bloomberg report, the platform is keen to offer token-to-fiat currency conversions on exchanges, but they must first obtain the prerequisite licenses from Hong Kong’s regulators. Ronald Iu, ZA Bank’s CEO, disclosed that the digital bank plans to offer settlement services in the yuan, U.S. dollars, and Hong Kong dollars.
ZA Bank has been offering the conversion service with the two licensed digital currency exchanges in Hong Kong—OSL and Hashkey. Given the relative successes of the operations, Iu expressed confidence in a seamless expansion to other digital currency firms operating on the counter as soon as they obtain licenses from the regulators.
Analysts are still determining how ZA Bank’s revenue model will work in the new offering, given its unimpressive financial figures in 2022. However, Iu remarked that onboarding new clients to the service is a priority that will open a floodgate of opportunities in the future.
“It’s too early to say what the revenue model is here. More clients, more deposits, more business opportunities is always great for the bank,” Iu said.
ZA Bank added that it would not increase its staff strength to meet the demands of its planned digital currency expansion. In 2022, the firm participated in a regulatory sandbox that onboarded nearly 100 firms using Hong Kong’s company registry data for local Web3 firms.
ZA Bank’s offer is coming at a turbulent time for the digital currency ecosystem that has been plagued by high-profile banking collapses in the United States. The collapse of Silicon Valley Bank (SVB) and Signature Bank significantly reduces the banking options available to digital asset service providers, as traditional banks have always viewed the industry with skepticism.
Chinese banks are circling Hong Kong’s local ecosystem
Despite the ban on digital currencies in mainland China, Chinese banks have been approaching digital currency firms interested in setting up shops in Hong Kong to offer financial services. Chinese banking officials have been spotted in Web3 events in Hong Kong, prompting analysts to hail the move as promoting healthy competition for the industry.
Hong Kong is going against the grain by announcing plans to throw its weight behind the Web3 industry after a previous crackdown. The government’s new receptive stance toward digital currencies has piqued the interest of nearly 80 service providers as they begin plans to settle in Hong Kong.
Lower tax burdens, clear-cut legislation, and easier residence permits for expatriates are some of the perks Hong Kong’s government offers to lure fintech firms to the city-state.
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