Hong Kong Stablecoin Coming Soon?

A Hong Kong stablecoin could be coming soon if current pressure from academics and researchers can convince policymakers to act.

According to a recent policy proposal from Wang Yang, Cai Wensheng, Lei Zhibin, and Wen Yizhou, the development of a Hong Kong stablecoin could help to solidify the special administrative zone as a crypto hotspot.

Moreover, the writers claimed that economic efficiencies created by the presence of a stablecoin pegged to the Hong Kong dollar would greatly improve liquidity markets.

It’s no secret that Hong Kong has been propelling itself to become a global hub for cryptocurrencies and digital assets.

Recent partnerships with Ripple to tokenize real-world assets and HSBC opening up crypto services for clients are just some of the most notable examples.

Coin Market Cap explained that the minting of an HKD-pegged stablecoin could give USD-pegged stablecoins a run for their money:

#CryptoNews: #Crypto and blockchain advocates have authored a report calling for the Hong Kong government to issue a #stablecoin pegged to the region’s dollar, which could challenge the dominance of #Tether and #USD Coin. 🇭🇰

— CoinMarketCap (@CoinMarketCap) July 5, 2023

Sky Guo explained: “Hong Kong has over 400 billion USD reserve, according to the HKMA. That is 5 times more than USDT, which reserve is still a question. Don’t underestimate the power of the e-HKD stablecoin.”

Hong Kong has over 400 billion USD reserve, according to the HKMA. That is 5 times more than USDT, which reserve is still a question. Don’t underestimate the power of the e-HKD stablecoin.

— Sky (@skyguoCypherium) July 2, 2023

The Block outlined some potential risks associated with an HKD stablecoin:

The proposal did acknowledge potential risks, such as legal and regulatory challenges, technical risks and short-term exchange rate fluctuations, but argues that the risks borne by government-issued HKDG were lower than those of stablecoins issued by private institutions.

Nischal Shetty offered his opinion: “This might be an interesting opportunity for many nations to experiment. CBDC would require a lot of regulatory and technology efforts, but a stablecoin is easier to implement. A stablecoin can be viewed as a precursor to a CBDC.”

This might be an interesting opportunity for many nations to experiment.

CBDC would require a lot of regulatory and technology efforts but a stablecoin is easier to implement.

A stablecoin can be viewed as a precursor to a CBDC. https://t.co/lpEcxGybFQ

— Nischal (Shardeum) 🔼 (@NischalShetty) July 4, 2023

Veteran trader Michaël Van De Poppe pointed out related developments in Hong Kong that are poised to make the special administrative zone a hub for digital assets.

De Poppe writes: “Hong Kong is the hub in Asia, as the biggest bank, HSBC, is now offering a Bitcoin ETF to customers. We’ve already had the news in the U.S., but Asia is following through. We’re at the start of the new bull cycle.”

News today:

Hong Kong is the hub in Asia, as the biggest bank, HSBC, is now offering a #Bitcoin ETF to customers.

We've already had the news in the U.S., but Asia is following through.

We're at the start of the new bull cycle.

— Michaël van de Poppe (@CryptoMichNL) June 26, 2023

Coin Telegraph provided background information on the authors of the proposal:

Wang Yang, vice president for institutional advancement at Hong Kong University of Science and Technology; Cai Wensheng, founder of smartphone software firm Meitu; Lei Zhibin, an honorary chair of the Hong Kong Blockchain Association; and doctoral student Wen Yizhou co-authored the paper.

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