Chinese tech giant Tencent is reportedly preparing to launch a blockchain-enabled virtual bank, after the company obtained a license from the Hong Kong Monetary Authority (HKMA).
Previously, Crowdfund Insider has reported that 8 virtual bank licenses have been issued with the most recent (4) being announced this past March. Tencent’s digital bank is the first to have announced the utilization of blockchain technology.
Hong Kong reviewed the concept of digital-only banks in 2018 and moved quickly to facilitate the regulation of these type of banks which will challenge traditional brick and mortar operations. In September 2018, CI reported that 29 companies applied for virtual banking licenses.
Hong Kong was slow to enter the Fintech race but has since ratcheted up the allocation of resources to become a regional leader.
While attending the World Blockchain Summit (held on November 7 in Wuzhen, China), Tencent’s head of blockchain efforts, Yige Cai, confirmed that the firm’s virtual bank has been approved by the HKMA. Tencent’s management is planning to put together a dedicated team to support the ongoing development and maintenance of the blockchain-powered banking platform, Chinese media outlet Sina Finance reported.
“Hong Kong’s new regulations and supervision on digital assets transactions validates the importance of blockchain technology and digital assets, which is good news for the whole industry.”
To date, the SFC has issued virtual bank licenses and permits to 8 different commercial entities. Infinium Limited, a joint project between Tencent, Industrial and Commerce Bank of China (ICBC) and several Hong Kong-based institutional investors, has also been granted a virtual bank license.
In July 2019, Tencent’s management renamed Infinium to Fusion Bank, after the entity was awarded a business license in May.
Cai did not share details regarding the virtual bank, however, he pointed out that Tencent has been involved in key blockchain-related initiatives, such as a supply chain financing platform for multinational fast-food chain franchise McDonald’s.
At present, Cai is leading the main consortium blockchain group out of Tencent’s three major DLT development groups. The other two DLT groups are tasked with creating blockchain-based infrastructure and cloud services for distributed platforms.
Alibaba’s Fintech division Ant Financial and SC Digital Solutions Limited are also involved in Chinese blockchain-related projects.
On November 6, 2019, the SFC released documentation about its updated licensing system to regulate digital currency transactions. The framework is somewhat similar to the one developed for securities brokers.