Crypto friendly bank ZA has decided to open physical branches in Hong Kong. According to a report by South China Morning Post, the Hong Kong Monetary Authority (HKMA) has made it possible for some of the city’s eight digital banks to open physical branches as part of its ongoing efforts to support the growth of these lenders.
Out of these eight banks, ZA Bank is one among the eight to establish a physical bank.
New Move To Likely Spur Competition
The move by HKMA is likely to create healthy competition in the market.
The action was taken in response to a plea by Hong Kong politician Johnny Ng Kit-chong for further assistance for cryptocurrency companies operating in the city, particularly given the difficulty web3 firms face in obtaining financial services.
Also Read: Hong Kong’s ZA Bank Enters Crypto Trading Phase Through Sandbox Testing
Hong Kong Banks Face Hinderance in Establishing Businesses
Strict laws and traditional banks’ wary attitude toward cryptocurrencies have made it difficult for Hong Kong’s cryptocurrency entrepreneurs to open bank accounts at present.
Approximately 95% of the more than 120 web3 businesses that opened in Hong Kong in 2022 experienced difficulties creating accounts with virtual banks, according to a research by HKMA.
Of these companies, 60% were required to keep fixed deposits, 54% took more than six months to create an account, and 70% were required to have directors or owners visit Hong Kong on several occasions. Three percent were refused outright, and nearly twenty percent took two to five months.
ZA Bank’s Previous Hong Kong Offerings
ZA Bank in Hong Kong had previously announced that it will start offering cryptocurrency trading to its regular clients in Hong Kong. Hong Kong’s Kong-based digital bank became the first bank in Asia to provide individual customers with Bitcoin and other cryptocurrency trading services via its app.
The expansion of the clientele to include retail clients coincides with an increase in pro-crypto laws and initiatives aimed at positioning Hong Kong as an East Asian center for cryptocurrency.
The increasing adoption of cryptocurrency in Hong Kong has encouraged other institutions in the area to implement pro-crypto policies.
Prior to this, the Hong Kong Monetary Authority (HKMA) had declared strategic alliances with the central banks of Thailand and Brazil in an attempt to encourage cross-border tokenization transactions.
Delivery versus payment, or DvP, and atomic settlement for digital assets were the main focus of these efforts, which focused on wholesale central bank digital currencies (CBDCs) for PvP settlements.
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