In a bid to boost local Web3 adoption, Hong Kong-based ZA Bank has announced that it will offer banking services to issuers of stablecoins. According to its official announcement, the online banking platform said that it will open up security for fiat reserves, which issuers can leverage to back up their digital assets.
ZA Bank to provide support for stablecoin issuers
The announcement also said that stablecoin issuers will be allowed to carry out other banking services, including fund transfers, deposit options, and payroll management. Alternate chief executive of ZA Bank Devon Sin, in his statement, talked about the bank’s unwavering support for the local Web3 community. He noted that this new service will help stablecoins issuers tackle several bottlenecks, which will promote growth and stability in the Web3 ecosystem.
Stablecoins often rely on the storage of an equivalent amount in circulation for them to maintain their value. A typical example is the dollar-backed USDT, which has dollars in reserves for every token in circulation. This ensures that users can always redeem their stablecoins for the same equivalent of the currency backing it. However, issuers have faced problems with managing their reserves.
Impact on Web3 ecosystem in Hong Kong
Since securing its license of operation from the Hong Kong Securities and Futures Commission (SFC), ZA Bank has secured about 80% of client needs in the country. The firm has also netted about $1 billion from its Web3-based clients. The firm also mentioned that it has onboarded more than 100 Web3 companies to push adoption. The bank regards its new feature as an important leap that will help actualize its vision for providing banking in the Web3 space.
The Hong Kong government announced last year that it would award licenses of operation to stablecoin issuers. This was evidenced in the consultation paper from the Hong Kong Monetary Authority, Treasury Bureau, and the Financial Services. The major criteria for obtaining the license, according to the consultation paper, is to ensure that all circulating stablecoins are backed with reserves that are equal to the value.
