Exclusive Interview with Xian Diyun, Acting CEO of Zhongan Bank Virtual Assets Will Become a New Growth Point

Interview with Xian Diyun, Acting CEO of Zhongan Bank Virtual Assets as Growth Point.

ZhongAn Bank's new CEO, Xian Diyun (Photo provided by interviewee)

Author: Morii & Alma

Editor: Marco

As a virtual bank in Hong Kong, ZhongAn Bank has a higher acceptance of new technologies and industries compared to its peers in Hong Kong.

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On May 24th, ZhongAn Bank announced plans to launch virtual asset trading services for retail investors.

ZhongAn Bank was established by ZhongAn Online Property Insurance Co., Ltd. (Hong Kong Stock Exchange stock code: 6060) and is responsible for international business. In March 2019, ZhongAn Bank obtained the first batch of virtual banking licenses issued by the Hong Kong Monetary Authority and officially started providing services to Hong Kong residents in March 2020.

In December 2022, the Securities and Futures Commission of Hong Kong proposed a plan to allow retail investors to trade tokens with large market values. In April 2023, ZhongAn Bank released its vision of “Banking for Web3”, aiming to provide commercial banking services to licensed exchanges and small and medium-sized enterprises in the Web3 ecosystem. In May, it announced plans to launch virtual asset trading services for retail investors.

ZhongAn Bank's new CEO, Xian Diyun (Photo provided by interviewee)

On July 12th, Techub News exclusively interviewed ZhongAn Bank’s new CEO, Xian Diyun.

Xian Diyun graduated from the Global Business program at the Chinese University of Hong Kong and previously served as Deputy Director at Standard Chartered Bank (Hong Kong), mainly responsible for the development of loan business. In 2018, he joined ZhongAn Bank as one of the founding members, primarily responsible for formulating business development strategies, developing innovative loan products, and improving the digital lending experience.

After announcing the development of virtual assets in Hong Kong, ZhongAn Bank closely follows the government’s policies and plans to launch a series of new initiatives targeting virtual asset enterprises and investors.

In the interview with Techub News, Xian Diyun pointed out that ZhongAn Bank plans to launch virtual asset trading services, aiming to provide retail investors with a secure, transparent, and convenient platform for digital currency trading. This will not only meet the growing demand for digital asset investments from customers, but also further promote the popularity and acceptance of cryptocurrencies. He stated that young people in Hong Kong have a relatively high acceptance of virtual assets, and virtual assets will become a new growth point for banks.

Xian Diyun introduced that the Hong Kong Monetary Authority has convened meetings between Web3 enterprises and banks, requiring banks to guide virtual asset enterprises on how to open accounts. If Web3 enterprises from mainland China want to open accounts in Hong Kong banks, they need to first register a company in Hong Kong.

Xian Diyun also revealed that according to market information, the focus of Hong Kong regulatory agencies is currently on stablecoins. Zhongan Bank also hopes to participate in the stablecoin ecosystem as a supporter within the scope allowed by regulation.

1. HKMA Engages Banks to Open Accounts for Virtual Asset Companies

Techub News: Recently, the HKMA convened a discussion with Hong Kong banks regarding virtual asset transactions. Did Zhongan participate? What are the main concerns of regulators?

Xian Diyun: The meeting was very open, with not only banks but also many Web3.0 participants and virtual asset participants.

The purpose of the meeting was to provide guidance to banks on opening bank accounts for Web3.0 operators, informing them of the materials needed to facilitate the account opening process to support their operations.

The HKMA strongly supports the development of this industry but also understands that banks may have concerns and worries. This meeting helped bridge the gap between banks and other participants, allowing both sides to clarify their needs.

Techub News: What are the biggest challenges encountered in the process of opening accounts for Web3 companies?

Xian Diyun: The biggest bottleneck we currently face is that some clients have to wait for a longer period of time due to limited human resources. We need to conduct customer surveys and a series of rigorous due diligence and compliance reviews, so the whole process may be slightly slower. Currently, there are 30 to 50 clients in the queue.

Techub News: If some projects want to establish a presence in Hong Kong and want to open accounts with you first, what should they do?

Xian Diyun: It’s very easy. You can contact our account manager, and we will arrange according to the client’s needs and priorities.

For simple companies, it may take two to three weeks, but if a company has a more complex structure and needs in-depth research, it will take more time.

Techub News: What is the process for opening such accounts?

Xian Diyun: Currently, the account opening process is mainly conducted offline. We need to meet with the company’s applicants and obtain their signatures. Of course, for some companies with simpler structures, such as Hong Kong companies or the ultimate shareholders in Hong Kong, they can fill out the information online using our technology and download our app for facial recognition. This online account opening process can be completed within two days.

Techub News: What are the requirements for the account opener?

Xian Diyun: Currently, we only support bosses with Hong Kong identity cards, and there are not many requirements for others. New companies are also very welcome.

Techub News: Are there any differences for Web3.0 entrepreneurs from mainland China who want to open accounts in Hong Kong compared to Hong Kong entrepreneurs?

Xian Diyun: First of all, they need to register a company in Hong Kong. After obtaining the company, they can apply for a bank account, which is the same process as other Hong Kong companies.

Techub News: Since Web3.0 enterprises basically do not have fiat currency flows, and they may not have opened bank accounts, some even only have multi-signature wallets. Does this pose difficulties for them to open accounts?

Xian Diyun: Our bank does not accept virtual assets, only fiat currency. For such companies, the simplest method is to open an account at a licensed exchange in Hong Kong, and then convert the cryptocurrency into fiat currency through the exchange before depositing it into our bank’s fiat currency account.

2. Virtual assets are a new growth point

Techub News: What specific services does Zhongan Bank provide for Web3.0?

Xian Diyun: We start with corporate services, supporting licensed exchanges or exchanges interested in applying for licenses.

On the other hand, we are also studying how to provide virtual asset trading services from the bank’s side under regulatory requirements. Of course, this requires cooperation with these exchanges after retail licenses are issued to the exchanges.

Techub News: In addition to corporate services and collaboration with licensed exchanges, what about retail services? Does Zhongan plan to apply for licenses and develop its own trading system?

Xian Diyun: We will not apply for exchange licenses for retail services in the short term. We currently have more than 650,000 retail customers, and our focus is to provide quality services to these customers. Therefore, we tend to cooperate with exchanges to provide one-stop financial services to customers, including virtual asset trading.

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

Xian Diyun: Currently, we already have the first type of license issued by the Hong Kong Securities and Futures Commission, which is 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 regulatory authorities in a timely manner.

Techub News: How is the progress of your cooperation with compliant exchanges?

Xian Diyun: In Hong Kong, there are currently only two licensed exchanges, both of which only serve institutional investors and professional investors because they have not yet obtained retail qualifications.

We have had deep cooperation with these two exchanges and have tried to provide products for corporate services, such as docking with their API interfaces to improve the efficiency of fiat currency inflows and outflows and virtual currency transactions during virtual asset trading.

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

Xian Diyun: We do not have specific numbers. But among the over 650,000 customers, approximately two-thirds are young people between the ages of 20 and 30, and they are more interested in virtual assets. This is also why we believe that virtual asset trading is a new expansion space and may become a new growth point.

3. Can open an account for visitors to Hong Kong

Techub News: Does Zhongan Bank need to form a new technical team to support new businesses when participating in virtual asset trading?

Xian Diyun: 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 have been looking for suitable talents. In fact, we believe that virtual asset trading is very suitable for our business development.

Techub News: You just mentioned that you are good at solving problems technically. Can you give a few specific examples?

Xian Diyun: First of all, as a virtual bank, our customers mainly open accounts through the APP. We have independently developed an eKYC system for personal identification. This core technology can not only identify user identities but also identify their credentials.

Although there are many similar products available for purchase in the market, we choose to independently develop for two reasons: first, it is more cost-effective; second, we can iterate faster to deal with issues such as fraud risks.

In addition, our system can support both Hong Kong residents and visitors to Hong Kong. They can use our technology to open Hong Kong accounts by using the Hong Kong and Macao Pass and Mainland ID cards, which is an innovative point for us.

Techub News: You just mentioned that Zhongan Bank attaches great importance to user experience, especially in digital currency trading. How does Zhongan Bank consider and design user experience?

Xian Diyun: First of all, as a bank, we need to ensure customer confidence and make customers feel that they are transacting with a bank. Therefore, system stability is very important. Secondly, we will choose to cooperate with the most trustworthy licensed exchanges so that they can provide quality services to our customers.

We will start from two aspects: ensuring security and simplifying services. Because for beginners, investing in digital currencies may involve many complex transactions, such as adding accounts, handling wallets, etc. We hope that Zhongan Bank can provide simpler solutions.

4. Will participate in the Hong Kong stablecoin industry from a custody perspective

Techub News: Will there be a competitive relationship between traditional banks when laying out virtual asset trading businesses?

Xian Diyun: I think we will definitely have a competitive relationship with 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 exchanges from the perspective of corporate business to improve the smoothness of the transaction process. From the retail perspective, we will consider whether to provide virtual asset trading services to customers.

In the future, more banks may participate in this field, which is a good thing for the entire market and will help the market to develop and grow.

Techub News: The volatility of virtual assets is significant. What risk control measures do you have in place for market fluctuations?

Xian Diyun: We need to conduct surveys with our customers to assess their risk tolerance. We will select those customers who are willing to accept higher risks based on the risk assessment and provide them with relevant products.

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

Xian Diyun: Currently, stablecoins are still in the process of regulatory transparency. We will consider participating from a custodial perspective, such as custodialing the fiat currencies of companies issuing stablecoins. We will focus on how to better custody fiat currencies and promote the healthy development of the stablecoin ecosystem. I believe that stablecoins are an important milestone in the development of the virtual market. Currently, the regulatory license of the Hong Kong Stock Exchange does not cover stablecoins such as USDC and USDT. Therefore, we will continue to observe other potential support measures that may emerge in the field of stablecoins in Hong Kong.

Techub News: If Zhongan Bank enters the stablecoin custody service, what are the core advantages of Zhongan compared to other banks?

Xian Diyun: For custodial services, our advantage lies in the fact that we have already provided high-quality services to exchanges. If we can provide the same high-quality service to stablecoin issuers, it will gradually form a closed loop from fiat currency to stablecoins, and then to other virtual assets. This will reduce transaction costs and improve transaction efficiency. We hope to connect key players in the field of virtual assets and provide better services to our customers.

Techub News: Does Zhongan have plans to launch Bitcoin and Ethereum futures ETFs?

Xian Diyun: Currently, we do not have such plans. We may observe market reactions when preparing to launch US stocks and then decide whether to provide ETF trading.

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