Hong Kong’s ZA Bank, a unit of China’s ZhongAn Online P&C Insurance, is looking into offering virtual asset-related services following the implementation of new regulations for digital assets starting in June. The city has established itself as a crypto hub by introducing a regulatory framework for crypto exchanges last year. Twenty-four companies are competing for licenses to operate within the city, with approval from the Securities and Futures Commission (SFC) being highly sought after. ZA Bank CEO Ronald Iu Man-chung has expressed the bank’s intention to launch virtual asset trading services for retail investors, but specific details will be announced at a later date.
The move by ZA Bank comes in the midst of a stricter regulatory environment in Hong Kong. In February, the SFC issued a warning to crypto investors, advising them to use only licensed platforms and to verify the registration status of their chosen exchanges. Hong Kong-based crypto exchanges had until the end of February to submit license applications to avoid closure by the end of May. The SFC has urged investors to transfer 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 hold licenses for virtual asset trading in Hong Kong, with 24 other applicants awaiting approval.
The SFC will publish a list of approved and rejected applications for virtual asset trading platforms on a public registry by June 1, 2024. The regulator recently approved the trading of Asia’s first exchange-traded funds (ETFs) directly linked to Bitcoin and Ether on the Hong Kong Stock Exchange. Hong Kong’s crypto landscape suffered a setback in the past due to unclear regulations and competition from hubs like Singapore and Dubai known for their crypto-friendly environment. However, the city is now making a comeback, with ZA Bank’s commitment to supporting the digital asset sector and the lifting of the retail crypto trading ban in 2023 signaling a renewed push to establish itself as a major crypto hub through its licensing program.
ZA Bank’s venture into crypto services reflects Hong Kong’s ambition to become a significant player in the digital asset market. The city’s regulatory reform for digital assets, including the launch of a new licensing program and the approval of ETFs tied to Bitcoin and Ether, is part of its strategy to attract more investors and traders. The competition among companies seeking approval for virtual asset trading platforms is fierce, with a significant number of applicants vying for licenses. This renewed focus on crypto activities in Hong Kong demonstrates the city’s commitment to enhancing its standing in the crypto industry and competing with other crypto-friendly hubs in the region.
The increasing interest in digital assets and the establishment of a regulatory framework for crypto exchanges highlight Hong Kong’s determination to position itself as a leading crypto hub. The introduction of licensing requirements for crypto exchanges, along with the approval of ETFs linked to major cryptocurrencies, reflects the city’s efforts to create a conducive environment for crypto-related activities. ZA Bank’s entry into the crypto space and its plans to offer virtual asset trading services further demonstrate Hong Kong’s commitment to becoming a major player in the digital asset market. With the upcoming announcement of approved and rejected applications for virtual asset trading platforms, Hong Kong’s crypto ambitions are set to gain momentum in the coming years.
