- ZA Bank now offers account and conversion services for crypto exchanges.
- The bank is already working with licensed crypto exchanges in Hong Kong.
- Binance Chief Executive Officer Changpeng Zhao has predicted that we could see crypto funds move to the city.
Following the collapse of crypto-friendly banks in the U.S., relations between crypto businesses and the banking sector have been frayed, particularly in the West. However, Hong Kong looks set to flip the script as its #1 virtual bank – ZA Bank – unveiled measures to onboard crypto exchanges.
ZA Bank Opens Its Doors to Crypto Exchanges
According to a Bloomberg report on April 12, ZA Bank now offers crypto conversion and account services for crypto businesses. The services will facilitate the withdrawal of crypto deposits in Hong Kong dollars, the Chinese Yuan, and U.S. dollars on crypto exchanges.
ZA’s Chief Executive Officer Ronald Lu said the bank already offers the service to HashKey and OSL, Hong Kong’s only licensed crypto exchanges. The bank’s Co-head of Retail Banking, Devon Sin, emphasized that the virtual bank will only work with licensed crypto exchanges and plans to ensure strict adherence to anti-money laundering (AML) rules.
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The service will not extend to mainland China, per the Bloomberg report.
Crypto Funds to Move to Hong Kong?
While the impact of ZA Bank’s latest move to serve crypto exchanges may be limited for now due to Hong Kong’s policy towards crypto, which restricts crypto trading to institutional-facing venues, the city plans to deprecate these rules in June to facilitate retail trading better.
At least 80 firms have shown interest in expanding to the region in response to its crypto policy change, as reported by DailyCoin last month, including ByBit, a leading crypto exchange based in Dubai.
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Binance’s Chief Executive Officer Changpeng “CZ” Zhao predicted in a recent tweet that there would be an exodus of crypto funds to Hong Kong banks, particularly from stablecoin issuers seeking institutions to hold their U.S. dollar reserves.
Binance was among the crypto firms affected by the collapse of Silvergate and Signature Bank earlier this year. The increased regulatory scrutiny that followed, and the banking sector’s growing aversion to crypto, have made it difficult for the crypto exchange to find new banking partners.
Hoping to buck this trend, ZA Bank is one of only eight licensed virtual banks in Hong Kong, boasting the highest net assets despite failing to become profitable. Bloomberg reported that its clientele comprises Web3 startups and small-medium enterprises (SMEs).
On the Flipside
- Hong Kong requires crypto businesses to obtain official licensing before operating in the city. Still, regulators are yet to ratify proposed new rules on the licensing process for retail-facing companies.
Why You Should Care
The latest step by ZA Bank highlights Hong Kong’s push to attract crypto businesses facing banking hurdles elsewhere.
Learn more about Bybit’s expansion to Hong Kong here:
Bybit Expands to Hong Kong Amidst Regulatory Crackdown in US
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