Hong Kong Dollar Stablecoin to Compete with USDT and USDC Proposed: Report

On July 4, Hong Kong University of Science and Technology Vice President Cai Wensheng wrote a proposal for an HKD stablecoin. The policy proposal was also made by Wang Yang, Lei Zhibin and Wen Yizhou but was not endorsed by the Hong Kong government.

Academics have a vision of a home-currency stablecoin that competes with industry-dominating Tether (USDT) and Circle (USDC).

A Proposal for Hong Kong to Issue a Stablecoin in Hong Kong Dollars to Compete with USDT/USDC

By Vice President of Hong Kong University of Science and Technology and Chairman of Meitu

Learn more: https://t.co/pCTxkqMLM7

– Wu Blockchain (@WuBlockchain) July 4, 2023

Hong Kong Govt Favorite Stablecoin

According to Chinese journalist Wu Blockchain, the proposal as issuing an HKD stablecoin would help cement Hong Kong’s leadership in the blockchain industry.

Other reasons for the proposal include propelling the local currency, improving transaction efficiency, reducing transaction costs, improving current payment systems, and “strengthening Hong Kong’s fintech capabilities.” “.

“In addition, the Hong Kong dollar stablecoin can improve the efficiency and inclusiveness of Hong Kong’s financial system; its stability, free trade, high security, openness and cross-border liquidity can support a wider range of financial innovation.

The proposal noted that the government’s current plan is limited in allowing and encouraging private institutions to issue HKD stablecoins.

“This measure is too conservative,” they said, as it does not match the government’s ambitions to promote the digital economy.

Therefore, academics suggest that the government should issue a stablecoin called HKDG backed by Hong Kong’s foreign exchange reserves, which stood at around US$430 billion in March 2023.

A local stablecoin would also help with dedollarization, they said.

However, any assets issued by the central bank would be highly scrutinized and potentially used as a surveillance tool, as is the case in China, which monitors Hong Kong.

Hong Kong launched new regulations for virtual asset service providers last month and is currently working on establishing a regulatory framework for stablecoins.

Asia rushes to regulate

Hong Kong is currently leading the way in crypto regulation in the region, but other Asian countries are catching up.

Japan has tightened its crypto regulations and KYC policies as it vies to become a regional hub for digital assets.

South Korea passed the Virtual Asset User Protection Act last week, and Singapore’s central bank proposed new crypto exchange rules to keep customer assets in trust.