Hong Kong-based ZA Bank, a unit of China’s ZhongAn Online P&C Insurance, is reportedly exploring the possibility of offering virtual asset services after new regulations on digital assets go into effect in June.
To position itself as a cryptocurrency hub, Hong Kong implemented a new regulatory framework for cryptocurrency exchanges last year. It required all exchanges operating in the city to apply for licenses by February 2024. Competition is fierce, with 24 companies applying for these coveted licenses.
The approval of Hong Kong’s top financial regulator, the Securities and Futures Commission (SFC), is highly desirable given its reputation as a prestigious regulatory body.
Capitalizing on this interest, ZA Bank CEO Ronald Iu Man-chung told SCMP in a recent interview that the bank is actively preparing to launch virtual asset trading services for retail investors. However, specific details will not be announced until preparations are completed, he added.
Hong Kong cracking down on unlicensed virtual asset exchanges
The bank’s foray into cryptocurrencies comes amid stricter regulations in Hong Kong. In February, the city’s securities regulator, the SFC, issued a warning to cryptocurrency investors. It urged them to use only licensed platforms and carefully check the registration status of selected exchanges.
This warning coincides with a critical deadline for Hong Kong-based cryptocurrency exchanges. They had until February 29 to apply for a license, otherwise they risked closure by May 31. The SFC website underscores the point with a clear message: unlicensed exchanges must close by the end of May.
The Commission also advised investors to move their digital assets to platforms that are already regulated or in the process of obtaining a license. Currently, only OSL Digital Securities and Hash Blockchain are licensed to trade virtual assets in Hong Kong. However, there are 24 applicants for approval, including names such as OKX, HKVAX, Bybit and DFX Labs.
The SFC will also disclose a list of approved and rejected applications for virtual asset trading platforms on the public register by June 1, 2024. The regulator also recently enabled Asia’s first ETFs directly linked to Bitcoin and Ether. The listing of these funds began Tuesday on the Hong Kong Stock Exchange.
Hong Kong’s crypto position suffered in mid-2022 due to a lack of clear regulations and the rise of rival centers such as Singapore and Dubai, known for their cryptocurrency-friendly approach. However, the city is returning the favor.
ZA Bank’s Ronald Iu underscores the bank’s commitment to supporting the digital asset sector, including Web3 startups, as Hong Kong boosts digital asset trading with a new licensing program. The program, along with the lifting of the ban on retail cryptocurrency trading in 2023, signals Hong Kong’s renewed push to become a major cryptocurrency hub.
