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As a virtual bank in Hong Kong, ZA Bank is more receptive to new technologies and industries than its Hong Kong peers.

On May 24th, ZA Bank, a Hong Kong-based virtual bank, announced plans to offer digital asset trading services to retail investors.

ZA Bank was established by Zhongan International, which is responsible for international business under Zhongan Online Property Insurance Co., Ltd. (HKEX stock code: 6060). In March 2019, ZA Bank received one of the first virtual banking licenses issued by the Hong Kong Monetary Authority and officially began serving Hong Kong citizens in March 2020.

In December 2022, the Hong Kong Securities and Futures Commission proposed a plan to allow retail investors to trade large market cap tokens. In April 2023, ZA Bank announced its “Banking for Web3” vision, providing commercial banking services for small and medium-sized enterprises within Hong Kong licensed exchanges and the Web3 ecosystem. In May, they announced plans to offer digital asset trading services to retail investors.

On July 12th, Techub News exclusively interviewed Dickson Sin, the incoming CEO of ZA Bank.

Dickson Sin, a graduate of the Global Business program at The Chinese University of Hong Kong, previously served as a deputy director at Standard Chartered Bank (Hong Kong), focusing on loan business development. He joined ZA Bank in 2018 as one of the founding members, mainly responsible for formulating business development strategies, developing innovative loan products, and enhancing the digital lending experience.

After declaring the development of virtual assets in Hong Kong, ZA Bank quickly followed the Hong Kong government’s policy and planned to launch a series of new initiatives for virtual asset companies and investors.

In the exclusive interview with Techub News, Sin pointed out that ZA Bank plans to launch digital asset trading services, aiming to provide retail investors with a safe, transparent, and convenient platform for cryptocurrency transactions. This will not only meet the growing demand for digital asset investment from customers but also further promote the popularization and acceptance of cryptocurrencies. Sin said that young people in Hong Kong are more accepting of virtual assets, which will become a new growth point for banks.

Sin explained that the Hong Kong Monetary Authority convened a meeting with Web3 companies and banks, asking banks to guide virtual asset companies on how to open accounts. If Mainland Web3 companies want to open accounts in Hong Kong banks, they first need to register a company in Hong Kong.

Sin also revealed that according to market information, the current focus of Hong Kong regulators is on stablecoins. ZA Bank also hopes to participate in the stablecoin ecosystem as a supporter within the permitted range of regulations.

HKMA Communicates with Banks on Account Opening for Virtual Asset Companies

Techub News: Not long ago, the HKMA convened Hong Kong banks to discuss virtual asset trading. Did ZA participate? What were the main concerns of the regulators?

Dickson Sin: That meeting was very open, and apart from banks, there were also many Web3.0 participants and virtual asset participants.

The purpose of the meeting was to give guidance to Web3.0 operators from banks, telling them what materials they need to prepare to smoothly open bank accounts to support their operations.

The HKMA is very supportive of the development of this industry but also understands that banks may have some concerns and worries. This meeting brought banks closer to other participants, and both parties can more clearly understand each other’s needs.

Techub News: What is the biggest problem encountered in the process of account opening for Web3 companies?

Dickson Sin: The biggest bottleneck we currently face may be that some customers have to wait for a long time because our human resources are limited. We need to do a series of customer surveys, rigorous due diligence, and compliance reviews, so the whole process may be a bit slow. Currently, there are about 30 to 50 customers in line.

Techub News: If some projects want to land in Hong Kong and they want to open an account with you first, what do they need to do?

Dickson Sin: It’s easy, you can contact our account manager, and we will arrange according to customer needs and priorities.

Simple companies may take two or three weeks, but if the company structure is more complex, more time is needed for thorough investigation.

Techub News: What is the process of opening these types of accounts?

Dickson Sin: At present, the account opening process is mainly conducted offline. We need to meet with the bosses of the applying companies and get their signatures. Of course, for some companies with simpler structures, such as Hong Kong companies or Hong Kong’s ultimate shareholders, they can fill in the information through our online technology and download our APP for facial recognition. This kind of online account opening process can be completed within two days.

Techub News: What are the requirements for the account opening entity?

Dickson Sin: As we only support Hong Kong ID cardholders at the moment, there are not many other requirements, and new companies are very welcome.

Techub News: For Chinese mainland Web3.0 entrepreneurs, if they want to open an account in Hong Kong, will there be any differences from Hong Kong entrepreneurs?

Dickson Sin: First, they need to register a company in Hong Kong. Once they have a company, they can apply for a bank account. This process is the same as other companies in Hong Kong.

Techub News: Since Web3.0 companies basically have no fiat money flow, and they might not have opened a bank account before, some even only have multi-signature wallets, will this pose difficulties for them to open an account?

Dickson Sin: Our bank does not accept virtual assets, only fiat currency. For such companies, the easiest way is to open an account at a licensed exchange in Hong Kong, and then convert the cryptocurrency into fiat money through the exchange, and deposit it into our bank’s fiat currency account.

Virtual Assets are a New Growth Point

Techub News: What specific business does ZA Bank have regarding Web3?

Dickson Sin: Firstly, we start from the corporate business, supporting licensed exchanges or those interested in applying for licenses.

On the other hand, we are also studying how to provide virtual asset trading services from the bank side under the premise of compliance with regulatory requirements. Of course, this has to wait until retail licenses are issued to exchanges, and then we can cooperate with these exchanges.

Techub News: If corporate business cooperates with licensed exchanges, what about retail business? Does ZA plan to apply for a license and develop a trading system by itself?

Dickson Sin: Retail business will not apply for an exchange license in the short term. We currently have over 650,000 retail customers, and our focus is to provide quality services for these customers. So we would prefer to cooperate with exchanges to provide one-stop financial services for customers, including virtual asset trading.

Techub News: If you cooperate with licensed exchanges, what licenses do you need to apply for?

Dickson Sin: At present, we already have the first type of license issued by the Hong Kong Securities and Futures Commission, namely the securities trading license, so we can provide fund investment services. In terms of providing virtual asset trading services, we will continue to prepare and communicate with the regulatory authorities in a timely manner.

Techub News: At present, how is your cooperation with compliant exchanges progressing?

Dickson Sin: In Hong Kong, there are currently only two licensed exchanges, and they only serve institutional and professional investors because they have not yet obtained retail qualifications.

We have deep cooperation with these two exchanges, trying to provide some products for corporate business, such as docking with their API interfaces, to improve the efficiency of fiat currency inflow and outflow and virtual currency trading during virtual asset trading.

Techub News: You just mentioned that there are over 650,000 retail users. How many of these users are interested in virtual asset trading?

Dickson Sin: We don’t have specific numbers. But among the more than 650,000 customers, about two-thirds are young people, aged between 20 and 30, and they are more interested in virtual assets. That’s why we believe virtual asset trading is a new expansion space and could potentially become a new growth point.

Account Opening Available for Tourists Visiting Hong Kong

Techub News: When participating in virtual asset trading business, does ZA Bank need to form a new tech team to support new business?

Dickson Sin: Of course, virtual asset trading is a new field, and we need to absorb talent from the market to support our development. As the largest virtual bank in Hong Kong, we are always looking for suitable talent. In fact, we think virtual asset trading is very suitable for our business development.

Techub News: You just mentioned that you are good at solving problems from a technical perspective. Can you give us some specific examples?

Dickson Sin: Firstly, as a virtual bank, our customers mainly open accounts through the APP. We have independently developed an eKYC system for personal identity recognition. This core technology can recognize users’ identities and their documents.

Although there are many similar products available for purchase in the market, we choose to develop independently for two reasons: one is lower cost; the other is that we can iterate faster to deal with issues such as fraud risk.

In addition, our system can support both Hong Kong residents and visitors to Hong Kong. They can use our technology to open a Hong Kong account through the Hong Kong and Macau pass and mainland ID card when they visit Hong Kong. This is an innovation of ours.

Techub News: You just mentioned that ZA Bank values the user experience very much, especially in digital currency trading. So, how does ZA Bank consider and design the user experience?

Dickson Sin: Firstly, as a bank, we have to ensure customer confidence and make customers feel like they are trading with a bank. Therefore, system stability is very important. Secondly, we will choose to cooperate with the most confident licensed exchanges so that they can provide quality services to our customers.

We will start from two aspects: one is to ensure safety, and the other is to simplify services. Because for novices, investing in digital currencies may involve many complex affairs, such as adding accounts and managing wallets. We hope that ZA Bank can provide simpler solutions.

Will Participate in the Hong Kong Stablecoin Industry from the Perspective of Custody

Techub News: When laying out virtual asset trading business, will there be competition among traditional banks?

Dickson Sin: I think there will definitely be competition between us and traditional banks because we are all in the banking industry.

The virtual asset field is a very new concept for the banking industry. We will provide quality services to the exchanges from the perspective of corporate business and improve the smoothness of trading processes. From the retail side, we will consider whether to provide virtual asset trading services to customers.

More banks may participate in this field in the future, which is a good thing for the entire market and helps the market to develop and grow.

Techub News: Virtual assets fluctuate a lot. What risk control measures do you have for fluctuation risks?

Dickson Sin: We need to conduct questionnaire surveys for customers to assess customers’ acceptance of risk. We will select those customers who can accept higher risks in the risk assessment and provide them with relevant products.

Techub News: How do you view the stablecoin track, and how will the bank participate in this track?

Dickson Sin: At present, stablecoins are still in the process of regulatory transparency. We will consider participating from the perspective of custody, such as the custody of the legal currency of the company that issues stablecoins. We will pay attention to how to better custody the legal currency and promote the healthy development of the stablecoin ecosystem. I believe that stablecoin is an important milestone in the development of the virtual market. The current Hong Kong Stock Exchange regulatory license does not involve stablecoins, such as USDC and USDT. Therefore, we will continue to observe other possible support measures in the field of stablecoins in Hong Kong.

Techub News: If ZA Bank enters the custodial services in the field of stablecoins, what is ZA’s core advantage compared to other banks?

Dickson Sin: For custodial services, our advantage is that we have already provided quality services to exchanges. If we can provide the same quality services to stablecoin issuers, it will gradually form a closed loop from legal currency to stablecoin, and then to other virtual assets. This will reduce transaction costs and improve transaction efficiency. We hope to link the key roles in the field of virtual assets and provide better services to customers.

Techub News: Does ZA plan to list Bitcoin and Ethereum futures ETFs?

Dickson Sin: We don’t have this plan at the moment. We may observe market reactions when preparing to list US stocks, and then decide whether to provide ETF buying and selling.

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