Hong Kong Dollar Stablecoin to Compete with USDT and USDC Proposed
In an exciting development in Hong Kong’s burgeoning crypto market, a new proposal for the creation of a Hong Kong Dollar (HKD) stablecoin has been made. This move comes not long after Hong Kong opened its doors to the world of cryptocurrencies.
On July 4, Vice President of Hong Kong University of Science and Technology, Cai Wensheng, together with Wang Yang, Lei Zhibin, and Wen Yizhou, presented a proposal for an HKD stablecoin. However, the policy was not endorsed by the Hong Kong government.
The academicians have envisaged a local currency stablecoin that stands to rival industry titans Tether (USDT) and Circle (USDC).
Hong Kong Govt Stablecoin Preferred
Chinese journalist Wu Blockchain stated that the introduction of an HKD stablecoin could further solidify Hong Kong’s position as a leader in the blockchain sector.
Several reasons, including strengthening the local currency, increasing transaction efficiency, reducing transaction costs, enhancing current payment systems, and boosting Hong Kong’s fintech capabilities, were given to support the proposal.
The proponents argue that an HKD stablecoin can “enhance the efficiency and inclusiveness of Hong Kong’s financial system, and its stability, freedom of exchange, high security, openness, and cross-border liquidity can support a wider range of financial innovations.”
Notably, the academicians criticized the government’s conservative stance, which currently only encourages private institutions to issue HKD stablecoins. They propose instead that the government issue a stablecoin called HKDG, backed by Hong Kong’s foreign exchange reserves which stood at around US$430 billion as of March 2023.
This move could also aid the de-dollarization process, but it’s worth noting that any central bank-issued asset would likely be highly controlled and could potentially be used as a surveillance tool, similar to practices in China, which has oversight over Hong Kong.
Asia Rushing to Regulate
Hong Kong is at the forefront of crypto regulations in Asia, with the launch of new regulations for virtual asset service providers last month and ongoing work on a regulatory framework for stablecoins.
Other Asian countries are also advancing rapidly in this domain. Japan has heightened its crypto regulations and KYC policies as it vies to become a regional digital asset hub. South Korea passed the Virtual Asset User Protection Act last week, and Singapore’s central bank has proposed new rules for crypto exchanges to safeguard customer assets.
