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

On July 4, Cai Wensheng, vice president of the Hong Kong University of Science and Technology, wrote a proposal for the 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.

The academic has a vision of a local currency stablecoin that competes against industry-leading Tether (USDT) and Circle (USDC).

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:

-Wu Blockchain (@WuBlockChain) 4 July 2023

Hong Kong government prioritizes stablecoin

According to Chinese journalist Wu Blockchain, Proposal Issuing the HKD stablecoin will help strengthen Hong Kong’s leadership in the blockchain space.

Other reasons cited to justify the proposal include promoting the local currency, increasing transaction efficiency, reducing transaction costs, improving current payment systems, and “further strengthening Hong Kong’s fintech capabilities”.

“Furthermore, the Hong Kong dollar stablecoin can 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.

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

“The measure is too conservative,” he said, “as it is not in line with the government’s ambitions to promote the digital economy.”

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

He added that a local stablecoin would also help in de-dollarization.

However, any asset issued by the central bank would be highly regulated and potentially used as a surveillance tool as it is in China, which has oversight over Hong Kong.

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

The race to rule Asia

Hong Kong is currently leading the way on crypto regulations in the region, but other Asian countries are following suit.

Japan has ramped up its crypto regulations and KYC policies while competing 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 crypto exchange regulations to hold customer assets in trust.