Introduction
The Stablecoin Ordinance will take effect on August 1, 2025, marking a pivotal moment for Hong Kong's digital asset ecosystem. Coupled with the recent release of Hong Kong's Digital Asset Development Policy Declaration 2.0, which heavily emphasizes stablecoins, this regulatory framework is set to reshape the region's financial landscape.
In this exclusive interview with Securities Times, Professor Xiao Geng—Vice Dean of the School of Public Policy at The Chinese University of Hong Kong (Shenzhen), member of the Hong Kong SAR Chief Executive's Policy Unit Expert Group, and Chairman of the Hong Kong International Finance Society—shares insights on the implications of stablecoin adoption for financial innovation, RMB internationalization, and investor opportunities.
Hong Kong's Strategic Advantages in Stablecoin Ecosystem Development
Securities Times: What unique advantages does Hong Kong offer in building a stablecoin product ecosystem?
Xiao Geng:
Hong Kong stands out as a global offshore financial hub with unparalleled asset pricing and trading capabilities. Its market integrates:
- Diverse participants: Investors from Mainland China and global markets.
- Free capital flow: Unrestricted inbound/outbound liquidity.
- Hybrid asset base: Underlying assets spanning mainland and international entities.
These factors enable Hong Kong to deliver high-quality price signals for financial assets, making it an ideal testing ground for fiat-backed stablecoins.
Impact on Mainland Monetary Policy and Regulation
Securities Times: Could large-scale issuance of RMB-linked stablecoins in Hong Kong affect mainland monetary policy?
Xiao Geng:
Hong Kong’s monetary authority operates independently, adjusting policies based on HKD-denominated assets. While offshore RMB products may influence onshore markets (e.g., exchange/interest rates), regulators would intervene if cross-border spillover risks emerge.
👉 Explore Hong Kong's financial frameworks
Accelerating RMB Internationalization Through Stablecoins
Securities Times: How will Hong Kong’s stablecoins advance RMB globalization?
Xiao Geng:
Hong Kong’s phased approach:
- HKD-pegged stablecoins as the initial step.
- Offshore RMB-backed stablecoins under government oversight, paired with asset management platforms.
- Expansion of RMB-linked offshore assets to boost adoption.
As the world’s largest offshore RMB hub, Hong Kong’s innovative cross-border products (e.g., Greater Bay Area initiatives) and regulatory flexibility position it as a testing ground for RMB digitalization.
Stability of Hong Kong’s Linked Exchange Rate System
Securities Times: Will stablecoins destabilize Hong Kong’s USD-HKD peg?
Xiao Geng:
Short-term arbitrage will ensure HKD-USD and stablecoin-RMB stability, but long-term valuation hinges on economic fundamentals. The USD’s volatility may accelerate Hong Kong’s shift toward RMB-centric capital markets, including stablecoin infrastructure.
Future Financial Product Innovations
Xiao Geng: The Stablecoin Bill paves the way for:
- Tokenized real-world assets (RWA) like property or commodities.
- H股-like digital securities: Mainland-backed assets traded/priced globally via Hong Kong’s platforms.
- Interconnectivity channels bridging mainland assets with offshore stablecoin products.
👉 Discover digital asset opportunities
Competing with Dominant USD Stablecoins
Securities Times: How can Hong Kong’s stablecoins gain traction amid USD dominance?
Xiao Geng: Key drivers include:
- USD depreciation trends shifting demand to alternatives.
- China’s economic stability enhancing RMB appeal.
- Real-world adoption: E-commerce giants (e.g., JD.com, Ant Group) leveraging stablecoins for cross-border payment efficiency.
Digital RMB vs. Stablecoins: Complementary Roles
Xiao Geng:
While the digital RMB streamlines sovereign currency digitization, stablecoins offer:
- Decentralized innovation for private-sector use cases.
- Cross-border liquidity without direct central bank control.
Investor Considerations
Key focus areas:
- Licensed stablecoin issuers (equivalent to HKD note-issuing banks).
- Compliance frameworks for new products.
- Mainland policy shifts enabling onshore-to-offshore asset conversion.
FAQ Section
Q1: What’s the timeline for Hong Kong’s stablecoin launch?
A: The ordinance takes effect in August 2025, with pilot programs likely earlier.
Q2: How will stablecoins impact traditional banking?
A: Banks may partner with issuers to offer hybrid services (e.g., custody, liquidity pools).
Q3: Are Hong Kong’s stablecoins CBDCs?
A: No—they’re privately issued but government-regulated, distinct from the digital RMB.
Q4: What sectors could tokenize assets first?
A: Real estate, trade finance, and green bonds are prime candidates.
👉 Learn about tokenization trends
This article reflects the interviewee’s views and does not constitute investment advice. Original publication: Securities Times (WeChat).