Hong Kong’s largest digital bank pursues stablecoin issuers

ZA Bank, Hong Kong’s largest digital lender, will now offer dedicated services to stablecoin issuers in the city-state.

In a recent announcement, the bank revealed that it’s in talks with eight potential clients about setting up dedicated accounts for the cash reserves they would use to back their stablecoins.

ZA Bank will only offer this service to clients who have been admitted to the Hong Kong Monetary Authority‘s (HKMA) regulatory sandbox. Launched in March 2024, the sandbox enables HKMA to communicate its supervisory expectations and obtain feedback from prospective stablecoin issuers. The sandbox has yet to admit any applicants.

ZA Bank’s newest service will offer the issuers other services, including fund transfers, several deposit options, payroll management, etc.

“Stablecoin use cases are very diverse, be it in wholesale or retail markets, tokenization, settlement for exchange trading, or to tackle overseas remittance pain points. We are keen to explore how to put them into real-world use with the potential issuers,” commented CEO Devon Sin.

He added that the bank is keen to address “the unique challenges faced by stablecoin issuers, ultimately promoting growth and stability within the Web3 economy.”

ZA Bank’s service aligns with Hong Kong’s aggressive push to become the global digital asset hub. In addition to the sandboxes, the city-state has issued enabling policies to spur growth and protect investors. It has even pushed local banks like HSBC and Standard Chartered to offer VASP banking services.

ZA Bank has increasingly pivoted to support the digital asset industry. In 2023, it launched token-to-fiat currency conversions and announced that it would allow fiat withdrawals for clients who deposited digital assets on licensed exchanges.

This pivot has paid great dividends for the bank. Sin revealed that ZA Bank had processed over $1 billion in transfers from over 100 digital assets and Web3 clients in the past year. It also claims to be handling the banking needs of 80% of Hong Kong’s VASPs.

The fact that lenders like ZA Bank are clamoring to serve VASPs is a testament to how much the industry has grown. Not too long ago, digital asset companies could not secure banking services anywhere, with some banks arbitrarily shutting down VASP accounts.