Hong Kong’s largest virtual bank, ZA Bank, has revealed that it will allow users to exchange cryptocurrencies for fiat currencies and offer banking services to digital asset firms in the city. The move marks a significant step towards the broader adoption of crypto in the town, which has been seeking to position itself as a critical player in the Web3 space.

ZA Bank to Allow Withdrawals in Hong Kong, China, and US Currencies

ZA Bank, the largest online-only bank in Hong Kong, now offers crypto-to-fiat conversion services to HashKey and OSL, the only two licensed crypto exchanges in Hong Kong, the lender’s CEO Ronald Iu said in a recent interview with Bloomberg. He noted that users could withdraw crypto deposits in US dollars, Hong Kong dollars, and Chinese yuan.

“For the dozen of interested firms, big or small, from abroad and local, top of their concern is to have a path to make things work,” said Iu. The CEO added that ZA Bank would also provide the same service for more crypto platforms in the city as they become licensed.

Moreover, ZA Bank will offer banking services, including online account opening, for local digital asset startups and small-medium enterprises. Devon Sin, alternate chief executive of ZA Bank, said that the bank is linked to the city’s company registry data, allowing minimal information input and cross-checking. He added:

“ZA Bank currently only plans to engage licensed exchanges and conducts AML scrutiny against the usual checklists to satisfy the regulatory requirements. No AML issues have popped up over the recent months of work.”

Founded by Chinese billionaire Ou Yaping among others, ZA Bank is backed by ZhongAn Online P&C Insurance, an online-only insurance company based in mainland China. It is the largest virtual bank in the city in terms of customer deposits, which exceeded $900 million in June 2022, according to a report by KPMG.

Hong Kong Accelerates its Web3 Push

Hong Kong has been aggressively pursuing its Web3 and blockchain push to position itself as a hub for digital innovation in Asia. The city has even pivoted toward a friendlier regulatory regime to attract more crypto companies.

In January, Hong Kong’s Securities and Futures Commission (SFC) published a consultation paper on its proposed regulatory regime for crypto trading platforms. The new rules are set to effect starting in June and require all crypto platforms to be licensed by the SFC.

The new regulatory regime would allow retail investors in the city to trade specific “large-cap tokens” on licensed exchanges, given that safeguards such as knowledge tests, risk profiles, and reasonable exposure limits are put in place.

Notably, the city has already seen significant interest from crypto firms. Hong Kong’s Secretary for Financial Services and the Treasury, Christian Hui, said last month that more than 80 companies working in the digital asset space had shown interest in establishing a presence in the city since October 2022.

The improving regulatory stance in the city has also led to a growing investor appetite for digital assets. As reported, Hong Kong investors have launched a new $100 million fund, ProDigital Future, to support early-stage crypto and Web3 companies.

Reiterating the city’s crypto hub ambitions, Hong Kong’s Financial Secretary, Paul Chan, said earlier this week that it is the “right time” for the city to push for Web3 despite the recent market volatility. Chan said the crypto industry is going through the same process as the Internet in the early 2000s, adding:

“In the next stage, market participants need to develop blockchain technology more deeply, so that its characteristics and advantages of transparency, efficiency, security, disintermediation, de-platformization, and low cost can find wider application scenarios and solve more existing problems.”

This article originally appeared on The Tokenist

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