Regulation
Hong Kong’s leading virtual bank to offer reserve services to stablecoin issuers
Hong Kong’s leading virtual bank to offer reserve services to stablecoin issuers
Hong Kong’s largest virtual bank, ZA Bank, broke ground earlier today by offer exclusive reserve banking services to stablecoin issuers, a move consistent with recent Regulatory progress in cryptocurrency.
This initiative is part of the territorial project New licensing regime for stablecoinswhich requires stablecoin operators to deposit reserve assets with local banks.
It is worth noting that this rule appears to “enhance the stability” and “security” of cryptocurrencies in the region. It also reflects a general trend where fintech innovation continues to be closely tied to more traditional financial regulation.
The first stablecoin issuer is already active
According to the report, Yuancoin has become one of those actively participating in its partnership project with ZA Bank, which is included in the Hong Kong Monetary Authority’s (HKMA) recently updated list of sandbox projects.
As the first stablecoin issuer to take advantage of ZA Bank’s new reserve banking services, this partnership symbolises a key step towards “enhancing the innovation and stability” of digital assets.
Yao Wensong, CEO of ZA Bank, announced the importance of these banking services would have for stablecoin issuers, noting that they combine traditional banking concepts with modern fintech innovation.
He also added that working alongside Yuancoin is another step towards real growth in innovation and further emphasis on the stability of digital assets. In his own words:
The digital bank that provides banking services to stablecoin issuers has successfully combined traditional banking with fintech innovation. The company’s cooperation with the currency symbolizes a joint commitment to promoting innovation and strengthening the stability of digital assets.
Additionally, the report reveals that ZA Bank revealed that it is in discussions with around ten other stablecoin issuers.
The bank is also said to have supported the HKMA regulatory frameworks and expects these initiatives to scale well in a controlled testing environment. The report notes:
The company fully supports the policies of the Financial Management Bureau and welcomes the relevant development to enter the sandbox stage. By providing a safe and reliable banking infrastructure, it will bring safer protection to users and further enhance the confidence of all parties in the stable money market.
What is the Hong Kong Sandbox Initiative?
The Hong Kong Sandbox is an initiative that provides a warm-up exercise for stablecoin issuers before broader regulations become a reality. the government is putting pressure with a view to establishing itself as one of the leading cryptocurrency hubs in the region.
Explaining the initiative, Eddie Yue, Chief Executive of the HKMA, recently said:
The sandbox arrangement serves as an effective channel for the HKMA and the industry to exchange views on the proposed regulatory regime and will facilitate the formulation of fit-for-purpose and risk-based regulatory requirements, which is essential to promote the sustainable and responsible development of the stablecoin issuance business.
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