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ZA and HashKey look to retail for virtual assets

ZA International and HashKey Group will target Hong Kong retail investors with undefined “Web3” services.



Michel Lee, HashKey; and Wayne Xu, ZA International

ZA International, which holds licenses for both a virtual insurer and a virtual bank in Hong Kong, has announced a partnership with HashKey Group to develop Web3-related services.

What exactly those services are, however, or what customer pain points they will address, the two parties declined to say.

Wayne Xu, president of ZA International (pictured, right), says the two companies have been working together informally over the past four years.

The relationship began because they both had offices at Cyberport, a state-backed office space for startups and tech companies. And both companies were excited by the Hong Kong Monetary Authority’s publishing a fintech-related blueprint, mapping out plans for introducing virtual banks, developing a faster-payments system, and encouraging data-sharing business models.

“These new licenses are pushing the front line for fintech in Hong Kong,” Xu said.

Follow the regulators

The parties decided to formalize a business relationship in November after the Securities and Futures Commission announced it would consider expanding its licensing regime for virtual-asset service providers (VASPs) to allow them to cater to retail investors.

There is no equity or cross-shareholding arrangements between the companies.

HashKey Group has received licenses of its own from the SFC, as a digital-assets exchange, the second to receive such an approval in Hong Kong. The company began as an investor in blockchain-related projects and now also develops its own technology.

“We’re bringing use cases to Web3,” said Michel Lee, executive president of HashKey Group (pictured, left). He says these include non-fungible tokens and tools for digital identity. “We want to make finance open and accessible.”

Retail uses

The two parties are going public with their collaboration because they want to develop regulated solutions for retail users, with an emphasis on security and identity. What those mean in practice, however, the two parties could not say.

Xu, asked what customer problem a blockchain-based solution could solve for ZA’s insurance or banking businesses, noted instead that there remain hurdles to be overcome. These include adapting traditional financial rules and regulations, integrating VASPs with conventional institutions, and further technological improvements.

“We’re pioneering what will be best practice for merging traditional finance and Web3,” Xu said.

Lee says blockchain-based tech is still too cumbersome for most retail users. He hinted that Web3 tech can bring privacy tools to improve the consumer experience, and enable trust in new financial businesses.

Crypto + TradFi

The FTX collapse and other scandals in crypto have reminded people of why regulation exists, Lee adds, but he says these laws were “written for paper-based systems”.

“We’re not ready to describe products,” Lee said. But he mentioned that if someone wants to mint an NFT, they must go purchase ether or other crypto, and therefore be familiar with digital assets. There is an opportunity for a virtual bank or insurer to make this much easier, or even invisible.

Xu noted the intention of ZA, the international arm of mainland China’s ZhongAn Online P&C Insurance, to issue “ZA Coin”, digital tokens that would serve as rewards. Users that amass these coins could use them to pay for ZA-related financial services. But that’s just a start.

“We are exploring ways to use ZA Coin to interconnect with the broader ecosystem,” he said. “Reward programs are traditional, but we can enhance the experience with blockchain, and connect customers to other systems, not just our own.”

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