Hong Kong’s ZA Bank becomes first virtual bank to get SFC license

ZA Bank has become Hong Kong’s first digital-only bank to receive a license for Type 1 regulated activity from the Securities and Futures Commission.

On September 30, a ZA Bank spokesperson said that ZA Bank had received approval from the China Securities Regulatory Commission to allow the company to add new conditions for virtual asset transactions to its Type 1 license, Hong Kong news outlet HKEJ reported.

This news follows a year-long process by the bank since Hong Kong financial regulators tightened restrictions on unlicensed exchanges and the development of a regulated crypto ecosystem.

The bank plans to implement a mutual fund service and operate under crypto regulations set by the country’s financial regulators.

ZA Bank CEO Rockson Hsu stated in a press release that the firm remains committed to becoming a “game changer” for the banking industry, two years after its official launch. He also highlighted the bank’s plan to launch a mutual fund service.

“We look forward to further enhancing the user experience with our game-changing mutual fund services!” said Hsu.

Hong Kong introduced new regulations in 2022 that require all crypto exchanges operating in the city to apply for licenses by February 2024. Since then, more than 24 companies have struggled to obtain a license. As of August 2024, approximately 12 applications, including Bybit, Huobi HK and OKX, have been withdrawn.

In May 2024, the SFC warned investors to only use licensed platforms. The country’s cryptocurrency regulations came into force in June 2023.

On July 18, 2024, ZA Bank began providing banking services to stablecoin issuers after the Hong Kong Monetary Authority announced a list of companies approved for the stablecoin sandbox initiative.

In a press release on July 18, ZA Bank has partnered with RD InnoTech, one of the first companies listed by the HKMA for sandbox trials. In that period, ZA Bank managed to onboard approximately ten additional stablecoin customers.