Advocates Call For Hong Kong Government Stablecoin To Compete With Tether And USD Coin

Crypto and blockchain advocates have written a report calling on the Hong Kong government to issue a stablecoin pegged to the country’s dollar that could challenge the dominance of Tether (USDT) and USD Coin (USDC).

According to the English translation of the July 3 report provided Four individuals connected to financial innovation, by Chinese crypto reporter Colin Wu Proposed The government issues a HKDG (Hong Kong Dollar Government) stablecoin to support its leadership efforts in the digital economy. Wang Yang, vice president of institutional advancement at the Hong Kong University of Science and Technology, Cai Wensheng, founder of smartphone software firm Meitu, Lei Zhibin, honorary president of the Hong Kong Blockchain Association, and PhD student Wen Yizhou co-authored the paper. ,

“Issuing a stablecoin pegged to the Hong Kong dollar not only helps strengthen Hong Kong’s leadership in the blockchain sector, but also helps the progress of a digital Hong Kong dollar, increases transaction efficiency, and lowers transaction costs.” improve the current payment system and further strengthen Hong Kong’s fintech capabilities,” the report said. “In addition, the Hong Kong dollar stablecoin could enhance the efficiency and inclusiveness of Hong Kong’s financial system; its stability , Freedom of exchange, high security, openness and cross-border liquidity can support a wide range of financial innovations.

Proposal for Hong Kong to issue Hong Kong Dollar stablecoin to compete with USDT/USDC

Vice President of the Hong Kong University of Science and Technology and President of MeToo

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

-Wu Blockchain (@WuBlockChain) 4 July 2023

Yang, Wensheng, Zhibin and Yizhou argued that the government’s plan to encourage private institutions to issue stable coins pegged to the Hong Kong dollar was “too conservative” in contrast to its intention to promote crypto and blockchain. The report claimed that Hong Kong’s foreign exchange reserves would be around $430 billion by March 2023, which was “significantly higher” than the combined market capitalization of USDT and USDC at around $120 billion.

“HKDG backed by the SAR government will have more credibility and less risk (…) especially when the credibility of USDT is in question, and USDC has experienced severe discounting recently.”

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The authors of the report believe that the benefits from the launch of the HKDG include challenging the dominance of the US dollar, providing additional liquidity for government projects, and making it easier for authorities to monitor and assess risks. However, the report cited legal and regulatory challenges, international disputes over transactions involving illegal funding, and potential risks including hacks.

“The risks borne by government-issued HKDGs are significantly lower than those of Hong Kong dollar stablecoins issued by private institutions,” the report said.

In June, the Hong Kong government announced that it had formed a task force to oversee the development of Web3. In addition to the nearly 800 fintech companies reportedly already present in Hong Kong, more than 80 companies involved in digital assets or blockchain reportedly considered establishing a presence in the SAR by March.

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