The How and Why Hong Kong Spearheads in Stablecoins Regulation丨CBN Correspondent
Host:StephanieLI
Guest:JackZhang,SFCHongKongCorrespondent
Stephanie:Hello,everyone!WelcometoCBNCorrespondent.Today,we’redivingintotheworldofstablecoinsandtheregulatoryraceheatingupbetweenHongKongandtheU.S.JoiningmeisJackZhang,ourreporterinHongKongwhohasrecentlybeencoveringthestablecoinsregulationinthecity.Jack,thanksforbeinghere!
Jack:Thanksforhavingme,Stephanie.Excitedtotalkaboutthispivotalmomentindigitalfinance.
Stephanie:Let’sstartwiththebignews:HongKongrecentlypassedtheStablecoinsOrdinance,becomingthefirstjurisdictiontofullyregulatefiat-backedstablecoins.Whyisthisabigdeal,andwhydidHongKongmovesoquickly?
Jack:Greatquestion.Thinkofitasabattleforfinancialdominanceinthedigitalage.TheglobalstablecoinmarkethitUS$250billionin2025,approximatelytheamountofM2moneysupplyintheU.S.,andcountriesrealizewhoevermastersregulationwillshapethefutureofpaymentsandfinance.HongKong’smoveisstrategic—theywanttosolidifytheirroleasaninternationalfinancialcenter.
Butit’snotjustaboutstatus.StablecoinslikeUSDThavefacedscrutinyoveropaquereserves—remember,only83%ofTether’sreservesmeettheU.S.GENIUSAct’sstandards.
HongKongsawagap:bymandatingstrictreserveseparation,regularaudits,and1:1redemptionguarantees,they’recreatingatrustframeworkthatcouldattractglobalissuerstiredofregulatoryambiguity.
Stephanie:Soit’sbothadefensiveandoffensiveplay—protectingtheirmarketwhilepositioningforgrowth.HowdoesthisfitintoHongKong’sbroaderWeb3.0strategy?
Jack:Exactly.Since2023,HongKonghasrolledoutpoliciesliketheVirtualAssetTradingPlatformregime.Thestablecoinordinancecomplementsthat,creatingafull-stackregulatoryecosystem.AsJeffreyDing,ChiefAnalystofHashKeyGroupsaid,it’saboutbalancinginnovationandrisk—givingbusinessesaclear“playbook”whilepreventinganotherTerraUSDcollapse.
HashKeyExchangeisthelargestlicensedvirtualassetexchangeinHongKong.Duringthelegislativeprocessofstablecoins,asanindustryrepresentative,itactivelyparticipatesinpolicyconsultationandpromotestheimplementationofthecomplianceframework.
Stephanie:SpeakingoftheU.S.,theirGENIUSActisalsomakingwaves.HowdoesHongKong’sframeworkdifferfromwhat’shappeningintheU.S.?
Jack:Let’sbreakitdown.Bothfocusonfiat-backedstablecoins,butthehowdiffers.TheU.S.usesadualregulatorysystem—federallawsplusstateoversight.
HongKong,though,centralizesregulationundertheMonetaryAuthority(HKMA).That’ssimpler,buttheyalsostayflexible.Forinstance,theywelcomenon-HKDstablecoins(likeUSDoroffshoreyuan),whereastheU.S.leansmoretowarddollar-centricrules.HongKong’sapproachisaboutbeinga“neutralhub”—opentoglobalissuersbutwithtightcontrolsonreservesandtransparency.
Stephanie:Aretheresimilarities?
Jack:Absolutely.Bothstress“samerisk,sameregulation”—meaningstablecoinactivitiesshouldberegulatedlikesimilarfinancialservices.ButinHongKong’sregulation,itexplicitlytargetscross-borderpromotion.IfastablecoinmarketstoHongKongusers,evenfromoverseas,itneedsalicense.That’sasmartmovetocurbregulatoryarbitrage.
Stephanie:Youmentionedflexibility.HowdoesHongKongbalancestrictruleswithinnovation?
Jack:Lookattheirsandboxapproach.CompanieslikeJDCoinlinkaretestingstablecoinsinphases—firstwithB2Bcross-borderpayment,thenexpandingtoretail.TheHKMAisn’tshuttingdownexperimentation;it’sguidingit.Forexample,theyallowissuerstoholdamixofcashandhigh-qualityliquidassets(likegovernmentbonds),aslongasthey’resegregatedandauditedmonthly.That’smorepragmaticthantheU.S.,whichleanstowardstrictercash-onlyreserves.
Also,HongKong’sgeographicedgecan’tbeignored.SittingatthecrossroadsofChinesemainlandandSoutheastAsia,it’sideallyplacedtotestcross-borderusecases.ImagineaHongKong-issuedstablecoinsettlingtradesbetweenaShenzhenmanufacturerandaSingaporeanbuyer—fast,cheap,andblockchain-based.That’sthefuturethey’rebettingon.
HongKong’sopennesstomulti-currencystablecoinsgivesitauniqueangle.IfaHongKongissuercanofferUSD,HKD,andCNYstablecoinsunderonelicense,that’saone-stopshopforglobalbusinesses—ahugesellingpoint.
Stephanie:Let’sshifttothebiggerpicture.HowcouldHongKong’sstablecoinframeworkimpacttheyuan’sglobalrole?
Jack:Thisiswhereitgetsreallyinteresting.ChinahaslongwantedtoreducerelianceontheSWIFTsystem,andstablecoinsofferapotentialworkaround.HongKong’sordinancedoesn’tmentionRMBdirectly,butissuerslikeJDCoinlinkareeyeingoffshoreyuanstablecoins.Imagineadigitalyuanproxy—regulatedinHongKong,backedbyyuanreserves,andusedfortradesettlementsacrossAsia.
Now,therearehurdles.Offshoreyuanstablecoinsneedcarefulcoordination.Butthankstothe“onecountry,twosystems”policy,HongKongisabletodotheexperimentation.
Astheyuanisincreasinglybeingacceptedbymoreeconomiesandmarketplayers,drivingitsinternationalization,stablecoinscouldbecometoolsformonetarysovereignty,saidShaJun,alegalexpertfromYingkeLawFirm.
Stephanie:CouldthischallengeSWIFT?
Jack:Maybenotovernight,butconsiderthestats:traditionalcross-borderpaymentscost6.4%infeesandtakedays.Stablecoinsdoitinminutesforpennies.IfHongKongcanonboardenoughbusinesses(likethe30,000+cross-borderfirmsintheirecosystem),thenetworkeffectcouldgrowexponentially.
OKGResearchpredictsstablecoinscouldhandleUSD100trillionintransactionsby2030—that’stwicethecurrentglobalGDP.SWIFTisn’tgoingaway,butstablecoinsmightcarveoutasignificantniche,especiallyinAsia.
Stephanie:Soundspromising,butwhataretherisks?
Jack:Trustisthebiggesthurdle.USDThasdominatedforyears,despiteitscontroversies.ConvincingusersandinstitutionstoswitchtoaHongKong-regulatedstablecoinrequirestimeandmarketing.Also,retailadoptionistricky—consumerswon’tswitchpaymentmethodsunlessthere’sakillerapp.Rightnow,stablecoinsshineinbusinessesandcryptotrading,butcustomersuseislagging.
Competitionisanotherfactor.TheEUisdraftingitsownstablecoinrules,andSingaporeiswatchingclosely.HongKongneedstokeepinnovating—maybebylinkingstablecoinstoitsdigitalyuanpilotorintegratingwithASEAN’spaymentsystems.
Stephanie:Towrapup,howdoyouseeHongKong’sroleevolvinginthisspace?
Jack:HongKongiscreatingatemplateforhowtoregulatedigitalassetswithoutstiflinginnovation.Thiscouldbeablueprintforotherjurisdictions,especiallyinemergingmarkets.
ForChina,it’sacrucialsteptopushforyuaninternationalizationindigitalform.Fortheworld,it’sasignthatthefinanciallandscapeisshifting—awayfromtraditionalbankingsystemsandtowardamoredecentralized,blockchain-drivenfuture.WhetherHongKongcanmaintainthisedgedependsonexecution,butsofar,they’vethrowndownthegauntlet.
Stephanie:Fascinating.Thanksforbreakingitdown,Jack.Forourlisteners,ifyouwanttodivedeeper,we’lllinktoJack’sfullreportontheHongKongStablecoinsOrdinance.Untilnexttime.
Jack:Thanksforhavingme,Stephanie.Staycurious,everyone!
ExecutiveEditor:SoniaYU
Editor:LIYanxia
Host:StephanieLI
Correspondents:JackZhang
SoundEditor:StephanieLI
GraphicDesigner:ZHENGWenjing,LIAOYuanni
Producedby21stCenturyBusinessHeraldDept.ofOverseasNews.
PresentedbySFC