Competition in the stablecoin arena is becoming increasingly fierce.
The U.S. Senate has just voted to pass the Stablecoin Genius Act, and Hong Kong's Stablecoin Bill has also ushered in new developments. On May 5, the Legislative Council of the Hong Kong Special Administrative Region of China passed the Stablecoin Bill in the third reading. So far, the Hong Kong Special Administrative Region has officially included legal currency stablecoins into the regulatory framework, and the virtual asset regulatory mechanism has become more perfect. Hong Kong Legislative Council member Wu Jiezhuang also tweeted that it is expected that by the end of this year, institutions can apply to the HKMA to become compliant stablecoin issuers.
Although the news caused a stir in the mainland and triggered a lot of traditional media to compete for coverage, and the X platform even shouted that Hong Kong was "beating the lead" in the United States, from the perspective of the entire crypto market, the impact of this bill is far less than that of the US Genius Act. The US eats meat and Hong Kong drinks soup, which seems to have become an inertia in the crypto market.
On the other hand, amid complaints of "getting up early and arriving late", the actual demand and application scenarios of Hong Kong's stablecoin are also being questioned.
1. Hong Kong passes stablecoin bill to fill regulatory gap
Looking back at Hong Kong's stablecoin bill, although the progress in terms of regulatory direction is not rapid, it is still at the forefront of the world.
alreadyIn December 2023, the Financial Services and the Treasury Bureau and the Monetary Authority of the Hong Kong Special Administrative Region Government published a document stating that they would collect public opinions on legislative proposals such as regulating issuers of fiat stablecoins and introducing a licensing system.
2024 year3In June, the Hong Kong Monetary Authority announced the launch of a stablecoin issuerSandbox,same yearIn July, the HKMAAfter months of public consultation,Release consultation documents to pave the way for subsequent drafts.On December 2024, 12, the Hong Kong government published the Stablecoin Bill in the Gazette and submitted it to the Hong Kong Legislative Council for the first reading on December 6.
On May 5 this year, the Hong Kong Legislative Council formally passed the Stablecoin Bill (hereinafter referred to asThe Hong Kong SAR Government has officially established a licensing system for issuers of fiat stablecoins, laying a solid foundation for Hong Kong to become a global virtual asset center.
From the perspective of the regulations themselves, consistent with the attitude towards virtual assets, Hong Kong followsThe principle of "same activities, same risks, same supervision" has established a complete, clear and flexible regulatory system. In terms of specific content, the draft gives a clear definition of stablecoins, covers a wider range based on the US payment stablecoin, and proposes a licensing system for stablecoin issuers as the main regulatory model. It is clear that the license system is applicable to stablecoins whose "pegged assets are single or multiple legal currencies", and the supervision focuses on legal currency stablecoins.
Hong Kong has entity requirements for stablecoin licensees. The institution applying for a license must have a physical company in Hong Kong or an authorized institution established as a corporation outside Hong Kong. The licensee must have at leastThe minimum paid-up share capital of HK$2,500 million, and the regulations on reserves and redemption also stipulate that the licensee must ensure that the market value of the reserve assets is at least equal to its circulating face value at any time, and the fractional reserve model is prohibited, that is, at least 1:1 full asset reserves, and the reserve assets must be isolated from other funds, and the details of the reserve assets must be disclosed to the public regularly; redemption is free, and the licensee must pay the face value of the designated stablecoin to the holder who makes a valid redemption request, and no cumbersome conditions and unreasonable fees shall be attached. There are also restrictions on the sales entities of stablecoins. The stablecoin issuing licensee and the virtual asset trading platform licensed by the Securities and Futures Commission are the main sales entities.
It is worth noting that from the perspective of jurisdiction, in addition to the direct issuance of stablecoins in Hong Kong, stablecoins pegged to the Hong Kong dollar are also subject to the jurisdiction of Hong Kong, covering both domestic and foreign countries.
Overall, Hong Kong’s stablecoin regulation shows a cautious and inclusive attitude, which is consistent with the latestGenius Act. Although Hong Kong has been involved outside the country, it emphasizes local issuance, while the United States clearly has extraterritorial mandatory jurisdiction. As long as the issuers serving American users are subject to jurisdiction; from the perspective of subject matter, Hong Kong allows financial institutions to participate and also accommodates non-financial institutions to settle in. The United States considers the impact and systemic risks of the financial system. In principle, it is more stringent for technology companies such as Meta to issue stablecoins. On the other hand, Hong Kong has not made mandatory requirements for reserve assets, but the US reserve assets specify assets such as the US dollar and US bonds, which releases demand for US bonds. In terms of transparency, Hong Kong only makes regular disclosure requirements, but the United States requires monthly public audits, and the CEO/CFO is responsible, which has higher compliance costs. What needs more attention is that there is a clear trend of dominating the global stablecoin rules in the US bill, but Hong Kong mentions more international cooperation issues rather than the definition of discourse power.
Despite the many differences, the legislation of stablecoins is still of far-reaching significance to Hong Kong itself. On the one hand, this legislation formally incorporates the legal currency stablecoin into the regulatory framework, further improving Hong Kong's local virtual asset regulatory mechanism. The compliance deposit and withdrawal of legal currency and stablecoins is opened, which can effectively promote the integration of traditional financial institutions andThe bridging of Web3 and the attraction of traditional institutions and users to participate are not only a beneficial attempt to link the government and the market, but also provide a driving force for the vigorous development of the virtual asset industry; on the other hand, the strong entry of the Hong Kong dollar stablecoin has also filled the market gap. At present, more than 99% of the stablecoins in the market are mainly US dollar stablecoins. The addition of the Hong Kong dollar has occupied a new ecological niche, which has not only reduced the dependence on the US dollar stablecoin, but also improved the security and autonomy of payment. It is also conducive to dispersing risks and serving as a currency bridge between China and the United States. In fact, in the context of the continued strengthening of the radiation power of the US dollar in the encryption field, integrating into the stablecoin ecosystem is also a necessary way to maintain Hong Kong's position as an international financial center. In addition, the promotion of the Hong Kong dollar stablecoin has also opened up space for the tokenization of Hong Kong assets, and more examples are expected to emerge in this field in the future.
2. Hong Kong once again overtook the United States, but it sparked doubts
Interestingly, due to the U.S.The Genius Act is still under revision in the Senate, and Hong Kong's first legislation has also made the market call for a "jump start". Unfortunately, looking at Hong Kong's progress in the field of encryption, whether it is the release of the virtual asset declaration, the approval of Bitcoin and Ethereum spot ETFs, or the exchange license system, everything is actually a jump start, but the final outcome can only be described as unsatisfactory.
Let’s compare the old data again. The US Bitcoin spotThe total net asset value of the ETF reached US$1276 billion, while that in Hong Kong was only US$4.4 million. The total net asset value of the US Ethereum spot ETF was US$87 billion, while that in Hong Kong was only US$0.5 million. The gap is very large.
The number of listed coins is also a good indicator of this.Take HashkeyExchange as an example, the total number of listed coins is only 19, of which only 4 are available for retail investors to purchase, namely BTC, ETH, LINK and AVAX. Compared with the US compliant exchange Coinbase, the number of tradable assets has reached 294, far exceeding Hashkey.
In this situation, the market often reveals someThe regret of "getting up early and catching up late". Judging from this bill alone, despite constant media coverage, the market's attention is very limited, and some even question whether it is another license sale. A typical example is that after Bitcoin broke through a new high of $11, Bloomberg's article directly pointed out that the reason was the US Stablecoin Act, but it did not mention the Hong Kong Stablecoin Ordinance at the same time.
The pessimism of the market is not groundless. The stablecoin landscape has always been characterized by a concentrated head effect, with the US dollar stablecoin dominating the market.USDT is the absolute leader, with a market share of $1520 billion, accounting for 62.29% of the total market; USDC has a market size of about $603 billion, accounting for 24.71%. These two alone account for more than 80% of the total market, and these two are precisely the US dollar stablecoins. In the future, USDe, USDS, and DAI are all stablecoins anchored to the US dollar. In this context, although Hong Kong has launched the Hong Kong dollar stablecoin, the market demand is obviously worth considering. In addition, the Hong Kong dollar already implements the US dollar linked exchange rate system, and when it is further subdivided into the Hong Kong dollar stablecoin, there is a sense of "stablecoin of the US dollar stablecoin".
At present, the main area of Hong Kong's stablecoins is still the local area. Under the current situation where it is difficult to open channels with the mainland, the application scenarios are obviously more focused on the wholesale side, and the market competitiveness is limited. However, the number of users determines the subsequent development of this type of stablecoin. Hong Kong Financial Services and Treasury Bureau Director Xu Zhengyu also explained this, saying that one of the main scenarios of stablecoins is cross-border and cross-jurisdictional payments. Hong Kong Legislative Council member Wu Jiezhuang also said that in the future, two directions will be promoted: one is to create more stablecoin application scenarios, including physical retail, cross-border trade and other fields; the second is to improve the market attributes of stablecoins, including releasing stablecoin interest to holders to enhance market competitiveness.
On the other hand, the introduction of stablecoins has opened a new wave of asset tokenization, but for localFor CBDC, it is a huge challenge. In fact, as early as the US authorities explicitly refused to issue digital dollars, some countries in the world had doubts about CBDC. The core is that the legal currency of most countries is strongly related to the US dollar. Without digital dollars, CBDC settlement can easily become rootless. The US stablecoin bill has once again declared the end of the fantasy of digital dollars.
Hong Kong also reflects a similar trend. As digital currencies, the Hong Kong dollar stablecoin and the digital Hong Kong dollar show a subtle competitive and cooperative relationship. They target the same group, so there is naturally competition. Users will choose one place, and resources will be allocated in a very rudimentary manner. However, there is a close cooperative relationship between the retail market and the cross-border market. For example, the digital Hong Kong dollar targets the retail market, and the Hong Kong dollar stablecoin targets cross-border payments. Not only does it improve efficiency, it can also avoid issues such as the monetary sovereignty of other countries. But in the short term, competition will obviously be more prominent.
3. Will Hong Kong’s stablecoin promote the internationalization of the RMB?
The mainland and Hong Kong are closely connected, and the market has also generated heated discussions on whether the Hong Kong dollar stablecoin can promote the internationalization of the RMB.
Xiao Geng, Chairman of the Hong Kong International Finance Association and member of the Expert Group of the Chief Executive's Policy Unit of the Hong Kong Special Administrative Region Government, said in an interview that the legal issuance of stablecoins in Hong Kong, China also means that there will be stablecoin asset management platforms linked to the RMB and supervised by Hong Kong, China in the future, which will promote the internationalization of the RMB and RMB assets. Member of Parliament Qiu Dagen also said during the bill review that Hong Kong is considering including the RMB in the legal stablecoin.
It is true that at a time when the competition for digital coinage is heating up, the Hong Kong stablecoin can indirectly promote the use of the RMB in cross-border payments to a certain extent. However, it is still a gimmick to mention the internationalization of the RMB and the RMB stablecoin too early at this moment.
On the other hand, when it comes to the internationalization of the RMB, the digital RMB is also a topic that cannot be avoided. Although since 2025, Beijing, Guangzhou, Shanghai, Zhejiang and many other places have released digital RMB pilot work development plans, and the application work deployment has also shown the characteristics of refinement and strong implementability from the overall planning, and the scenario application has entered the stage of refined integration, but from the top level, the digital RMB seems to have cooled down.
Citing data from the mobile payment network, looking at the main time nodes of the development of the digital RMB, the last time the central bank released a white paper on the digital RMB was in 2021, and the last batch of pilot cities was announced in December 2022. Even for the disclosure of application data, the latest disclosure data is only until September 12, and the stage time nodes are continuing to lengthen. The policy terms have also changed, from the initial "active and steady progress" and "unswerving progress" to the current "steady and orderly progress" and "solid progress", which is enough to show that the pace of the promotion of the digital RMB by the central bank, the competent authority, is actually slowing down step by step, and the attitude is shrinking from active to inward, emphasizing "stability". As for the reasons, it is nothing more than the difficulty of changing user habits, the relationship of functional coordination, ecological promotion, governance mechanism and other issues. Even the fall of Yao Qian, the first director of the Digital Currency Research Institute of the People's Bank of China, has more or less made the top leaders more cautious about the digital RMB. The situation shown is that the digital RMB positioned in retail is progressing faster in government and enterprise services, peer institutions and cross-border. At present, compared with the stablecoins that may appear in the future, the interaction between the digital RMB and the digital Hong Kong dollar is obviously closer.
Back to the topic, whether it is stablecoin or digital RMB, no matter what currency it relies on or what path it takes, the battle for coinage rights in the digital age has already sounded. If we do not occupy the ecological niche early, we will eventually become passive in the financial field. This move by Hong Kong is not only a realistic requirement under the rampant illegal stablecoin transactions, but also an inevitable measure to maintain payment sovereignty in the development of digital currency. In the long run, this may also be one of the strategies for Hong Kong to continue to play the role of a window and bridge.
Hong Kong has taken another shaky step in innovation and risk control. Although it is still not optimistic at the moment, looking back over a longer period of time, I believe this is still an important moment in history.