Edited by: Babyewhale, Techub News
Following the spot ETFs of Bitcoin and Ethereum, stablecoins based on the Hong Kong dollar have also been put on the agenda. A month ago, JD.com’s JD CoinChain Technology (Hong Kong) announced that it would issue a Hong Kong dollar stablecoin based on the public chain and anchored 1:1 with the Hong Kong dollar, which ignited the market’s enthusiasm for Hong Kong dollar stablecoins. Under the brilliant performance of “predecessors” such as USDT issuer Tether and USDC issuer Circle, participants in the Hong Kong dollar stablecoin, including CoinChain Technology and Circle Coin Technology, have also given Hong Kong another story worth looking forward to.
However, not everyone is optimistic about the development of the Hong Kong dollar stablecoin. Although its application scenarios can be seen in payment, RWA and other scenarios, many people are worried about whether it can really achieve scale and whether it can be widely used in other on-chain applications.
In this regard, we have invited some influential people in the industry to share their true thoughts on the Hong Kong dollar stablecoin. In the end, there are both optimists and skeptics. The author will present the two types of views separately, hoping to bring some thoughts:
Supporters
We first asked this question to Wu Jiezhuang, a member of the Hong Kong Legislative Council and a supporter of the development of Web3 in Hong Kong. Wu said that the Hong Kong Legislative Council will legislate on stablecoins next year. Hong Kong is very confident in the development of stablecoins and is very optimistic about this field.
In addition, Councillor Wu also stated that the issuance of stablecoins in Hong Kong should be combined with actual application scenarios, and is not limited to the issuance of Hong Kong dollar stablecoins, but can also issue offshore RMB or even euro stablecoins.
Cobe Zhang, CEO of ZAN, a Web3 brand under Ant Digits, said that on-chain investment has long faced the risk of "financial idleness", and RWA will be the hope to break through this bottleneck. We hope that Hong Kong can become the RWA asset issuance and trading center in the Asia-Pacific region in the future, which will also bring more application scenarios for stablecoins.
Eva, head of Matrixdock, said that stablecoins play a key role in the tokenization of RWA and have become the most classic application case, with a market value far exceeding other RWA assets. As the global demand for stablecoins continues to grow, its trading volume has dominated the cryptocurrency market. Governments in regions such as Hong Kong have actively promoted stablecoin regulation and launched the highly anticipated sandbox program, which is expected to become the first region in the world to allow banks to issue stablecoins. These developments have not only accelerated the application of stablecoins, but also promoted the process of RWA tokenization, encouraging more governments and institutions around the world to actively participate. Hong Kong's exploration of stablecoin regulation is expected to enhance the transparency of the global market and the resilience of the financial system, and further promote the legalization and development of the crypto industry.
In addition to stablecoins, more real assets such as gold and real estate are gradually being tokenized and gaining widespread recognition. This trend is not only an important part of financial innovation, but also one of the development directions of industrial blockchain. As large-scale industrial assets are tokenized through blockchain technology, more institutional investors have entered the crypto market, significantly improving the liquidity and transparency of global assets and promoting the development of asset management and trading. As Asia's diversified RWA tokenization platform, Matrixdock is also constantly innovating to promote the deep integration of traditional finance and digital economy.
Lily Z. King, COO of Cobo, a digital asset custody and wallet technology provider, said that Cobo conducted in-depth discussions and research with participating institutions and regulators at the beginning of the first batch of Hong Kong stablecoin sandbox applications, and became the preferred digital wallet partner of Yuanbi Technology, one of the first sandbox participants. Based on our insights, stablecoins are not only a tool to bridge traditional finance and digital assets, but also a key node in the global financial system. By being pegged to fiat currencies or other stable assets, stablecoins provide a bridge that connects traditional finance and the DeFi world. This bridge is critical to driving mainstream adoption because it gives investors a familiar sense of security and stability when exploring emerging digital assets.
At present, stablecoins not only show unique advantages in payment and settlement, but may also become the cornerstone of the digital economy in the future. Hong Kong's innovation and breakthroughs in this field may determine its position in the global digital economy. From a macro perspective, Hong Kong has a deep financial market foundation, a strong regulatory framework, and a determination to use digital currency as its next economic driver, which makes it an ideal place to promote the development of stablecoins; from a micro perspective, the diversity of Hong Kong market participants (including traditional financial institutions in the East and West, Internet head companies, and blockchain native teams) will be conducive to the exploration of users and business scenarios of Hong Kong stablecoins, providing a strong infrastructure for the arrival of the Summer of PayFi.
Meng Dinglin, partner of Minimalist Currency, expressed his views from the perspective of supervision. He said that from the perspective of the legislative proposals issued, it is mainly reflected in the management measures of stablecoin licenses, operations and exits. The application of stablecoins is less involved. And the application of stablecoins is the key to success.
As a digital currency, stablecoins are completely different from traditional legal tender electronic currencies. If stablecoins are used in current traditional industries, it is meaningless. They cannot compete with electronic currencies. The basis for the application of stablecoins is the rich ecology of digital assets and digital applications. Without these foundations, it is difficult for issuers of stablecoins to make profits and continue to operate.
Therefore, we believe that compared with the regulatory policies for stablecoins and the regulatory policies for the transfer of traditional assets to digital assets, the policies to promote the digital asset application ecosystem should be established first, or launched at the same time. For example: relevant policies should be issued to support the trial of stablecoins in certain specific businesses (cross-border payments, specific RWA, etc.) in the current financial system. After gaining experience, the scope of application can be gradually expanded.
In addition, the operation of digital assets can have its own regulatory functions as required, so the supervision can be different from the current financial supervision. The regulatory authorities can implement real-time supervision of specific applications by reviewing the specific smart contracts of the application party, which is more efficient, less costly and more effective.
Skeptics
Of course, if there are supporters, there will also be voices from the other side. Among the people we interviewed, there are also some people who believe that Hong Kong’s issuance of Hong Kong dollar stable coins may not have the desired effect, and some even question its necessity:
Joe Zhou, deputy editor-in-chief of Foresight News, said that he is worried about whether the Hong Kong dollar stablecoin companies have enough market competition. Joe Zhou said that through equity, whether it is Yuanbi, JD.com, or Standard Chartered, the three institutions are controlled by institutions with traditional financial backgrounds. At the same time, these three teams do not have enough native Web3 talents, which may be a major obstacle for them to compete with global stablecoin companies. Another point is that the Hong Kong dollar stablecoin is an extension of the Hong Kong dollar. Will this greatly limit its scale? Just like the current gap between Hong Kong ETFs and US ETFs.
Fang Hongjin, co-chairman of the Hong Kong Blockchain Association, unexpectedly holds an almost completely opposed attitude towards the Hong Kong dollar stablecoin. He believes that no matter how big a mainland company the issuer is, it is almost a false proposition.
Fang Hongjin said that he understood that some institutions in Hong Kong with backgrounds in large mainland companies planned to issue Hong Kong dollar stablecoins. The purpose was to cooperate with domestic companies in cross-border trade and cross-border e-commerce to provide convenient point-to-point payment services.
Fang Hongjin believes that the Hong Kong dollar itself is a regional currency issued and pegged to the US dollar. It maintains a pegged exchange rate with the US dollar and has difficulty in having an independent monetary policy (such as interest rates). It can be freely converted into US dollars in Hong Kong. In addition to having an exclusive legal tender status in Hong Kong, the Hong Kong dollar has no application scenarios in other countries and regions (maybe with the exception of Macau). Therefore, since there is a mature and widely accepted US dollar stablecoin model, issuing a Hong Kong dollar stablecoin is basically unnecessary.
Fang Hongjin said that first, when mainland enterprises or individuals apply to the State Administration of Foreign Exchange for foreign exchange inward or outward remittance indicators, it is the same whether the foreign exchange is US dollars or Hong Kong dollars, and there is no preferential policy for applying for Hong Kong dollars; secondly, it is estimated that no country or region except Hong Kong will choose to accept Hong Kong dollar stablecoins when they can receive US dollar stablecoins; thirdly, the application of Hong Kong dollar stablecoins in the local retail market in Hong Kong is also difficult to expand, because the Hong Kong government is actively promoting the use of CBDC-type digital Hong Kong dollars in Hong Kong. There is almost no difference in the experience of using the Hong Kong dollar stablecoin issued by enterprises and the digital Hong Kong dollar issued by the government, and Hong Kong residents may be more inclined to digital Hong Kong dollars.
Although it is not optimistic about the Hong Kong dollar stablecoin, it still believes that stablecoins still have opportunities, but they must break through the shackles of being currently limited to anchoring to fiat currencies and issue on-chain commercial paper for enterprises, stablecoins with income, and stablecoins anchored to value-added physical assets.
Finally, a senior industry insider who requested anonymity summed up the thoughts of most pessimists in one sentence: USDT’s success cannot be replicated, and the success rate of trying to create a stablecoin is not high.
