Hong Kong has reaffirmed its support for Stubcoin as it prepares to implement a new regulatory regime for Fiat Reference Issuers in August.
On Saturday, Hong Kong's finance secretary Paul Chang linked his expansion of Stable Coin's development across the global South and parts of Asia to resolve trade in local currencies rather than relying on the US dollar.
write In his official blog after a visit to Tianjin and Beijing, he said for the World Economic Forum's “Davos in the Summer” that “Stablecoins provide a cost-effective alternative to the traditional financial system.”
They also “could lead to changes in payments and capital market activities, including cross-border payments,” the official added.
The comments are in close sync with the broader driving forces of Beijing's expansion as China continues its efforts to internationalize the yuan.
As the world's largest trading nation since 2017, China's global trade footprint highlights the rise in demand for yuan settlements and Hong Kong's position as a top offshore RMB hub.
They hope to control future Hong Kong laws scheduled for August 1st. Establish A licensing regime for fiat reference silly stubcoin issuers under the supervision of Hong Kong monetary authorities.
The law requires strict compliance with authorized entities, including reserve asset management, pervalue redemption, fund segregation and AML control.
Set a high bar
Only authorized entities are permitted to issue or sell periodic forms to retail investors. The administration has opened the door to multicurrency issuance by providing a more global framework than some jurisdictions, but analysts say the law sets a high bar.
“Its capital requirements are roughly three times more than in Singapore,” says Sean Lee, co-founder of digital asset technology company IDA, focusing on developing a regulated stubcoin infrastructure — Decryption.
He called this approach progressive, but it was more likely to attract domestic players than global giants like Circle and Tether.
Lee added that due to the mandatory Hong Kong-based reserves and operational presence, direct issuance by large global companies is unlikely. Instead, he hopes that the professional use of offshore stubcoin will last through distribution partners.
Retailers seem to be limited in particular with Hong Kong's mature domestic digital payment system. However, cross-border business use remains promising.
“Don't underestimate the offshore CNH angle. That's the main reason why the Hong Kong administration has full support from Beijing,” Lee said, referring to the offshore yuan traded outside mainland China.
However, despite theoretical cost savings, the use of Stablecoin may not yet surpass existing options.
“If all costs are included, end-to-end costs aren't necessarily cheaper at this point compared to established players like Wise,” Lee points out, citing the lack of liquidity in different currencies.
Other fintech players, including the $6.2 billion valuation startup, Airwallex CEO Jack Zhang, are more pessimistic, but reflect that sentiment.
“I don't know how Stablecoin can lower the fees. The off-ramp from Stablecoin to the recipient's currency is much more expensive than the FX Interbank market,” he said. I said x at the beginning of this month.
Still, Lee remains optimistic that this will change. “In the end, Stablecoin-based transaction costs (including FX) will drop,” he said.
edit Sebastian Sinclair
