Key takeaways:
- The announcement made by Hong Kong’s ZA Bank that it will provide specific banking services for stablecoin producers is expected to hasten the local adoption of Web3.
- Stablecoins often require the issuer to have an equivalent quantity of fiat money, like dollars, as fiat reserves in order for them to retain their value.
The announcement made by Hong Kong’s ZA Bank that it will provide specific banking services for stablecoin producers is expected to hasten the local adoption of Web3.
The virtual bank, with its headquarters in Hong Kong, announced on April 5 that it is protecting fiat reserves, which issuers can use to support digital assets.
Additionally, issuers of stablecoins will have access to banking services like different deposit options, payroll administration, and fund transfers.
The Web3 community enjoys “unwavering support” from ZA Bank, according to Devon Sin, the alternate chief executive:
“With these new services, we’re directly addressing the unique challenges faced by stablecoin issuers, ultimately promoting growth and stability within the Web3 economy.”
Stablecoins often require the issuer to have an equivalent quantity of fiat money, like dollars, as fiat reserves in order for them to retain their value. This ensures that stablecoin owners can always trade their coins for the same amount of fiat currency.
Issuers of stablecoins have encountered challenges in securely maintaining these reserves, impeding their broader adoption and generating a noteworthy necessity within the broader Web3 ecosystem.
ZA Bank has been actively trying to get more involved in the developing Web3 scene in Hong Kong. In 2023, it reported more than $1 billion in customer transfers in the Web3 domain.
One day after the Hong Kong Securities and Futures Commission (SFC) declared it would start accepting applications for retail virtual asset trading platform (VATP) licenses, it stated in May 2023 that it would begin providing retail virtual asset trading in the administrative region.
Since then, the bank is said to have met more than 80% of the VATP’s client banking requirements in Hong Kong.
In an effort to promote local adoption, it claimed to have worked with more than 100 Web3 enterprises to onboard them.
According to a consultation document from the Financial Services, the Treasury Bureau, and the Hong Kong Monetary Authority, the Hong Kong government declared in December 2023 that it will require stablecoin issuers to get licenses.
To be eligible for such a license, all stablecoins in circulation must have reserves “equal to the par value” and be fully backed.
