Lily Z.King Cobo Global May 21, 2025 17:55 Singapore
Editor's Note: (South China Morning Post) On May 20, the website published an article by Cobo COO Lily Z. King, which deeply analyzes the rise of crypto assets as 'digital gold' and new financial infrastructure against the backdrop of current global economic fragmentation.
Note: This article refers to the English translation for reference; click 'Read the original text' to access the English version.
In recent months, the global financial system has undergone dramatic changes, highlighting the increasingly important status of digital assets. The scale of US Bitcoin spot ETFs (exchange-traded funds that allow investors to indirectly invest in Bitcoin) has exploded, with assets under management surpassing $120 billion, reflecting a significant shift in investor behavior.
Meanwhile, the trading volume of stablecoins surged to over $27 trillion last year, surpassing the total volume of transactions by Visa and Mastercard. In Asia, jurisdictions such as Hong Kong have taken the lead by issuing exchange licenses, establishing stablecoin regulatory frameworks, and approving cryptocurrency ETFs, striving to position themselves as regional hubs for the digital asset economy.
These are not isolated events; they reflect a broader reassessment of the practical value of cryptocurrencies in an era of increasing economic fragmentation and uncertainty. We might call this the 'paradox of uncertainty': digital assets are moving from the fringes of speculation to the mainstream, unexpectedly becoming a hedge tool against systemic risks.
As governments around the world set up barriers to trade and capital flows, blockchain is quietly building a 'highway' to promote global capital movement. Gold remains the traditional safe-haven asset, but it cannot complete cross-border transactions in minutes, nor can it bypass financial system restrictions during a crisis.
The enthusiastic response from investors to Bitcoin spot ETFs indicates the appeal of the concept of 'digital gold'. When US regulators approved such products in January last year, many skeptics predicted a tepid market reaction. However, the fact is that BlackRock's iShares Bitcoin Trust (IBIT) has rapidly grown, with assets under management exceeding $65 billion, becoming the world's largest Bitcoin spot ETF.
Beyond the narrative of 'digital gold', the true revolutionary significance of cryptocurrency lies in its ability to construct a new financial system independent of traditional financial intermediaries. The core of this system is stablecoins: blockchain tokens pegged to fiat currencies such as the US dollar.
The stablecoin market has rapidly expanded from $2 billion in 2019 to over $200 billion in circulation today, becoming an indispensable financial tool in markets where local currencies are unstable or cross-border capital flows are restricted.
The business sector has keenly sensed this trend. In October last year, Visa launched the 'Visa Tokenised Asset Platform', helping banks issue and manage fiat-pegged digital tokens; last month, fintech company Stripe began testing stablecoin payment solutions in emerging markets, making it easier for businesses to access US dollars through digital tokens. Mastercard also introduced new features supporting stablecoin transactions.
The dual role of cryptocurrency as a hedge tool and an innovative platform is most vividly reflected in Hong Kong. In a very short time, Hong Kong has transformed from a cautious observer to a leader in the global cryptocurrency regulation and application field.
Since 2020, the Hong Kong Securities and Futures Commission (SFC) has issued licenses to 10 virtual asset trading platforms, bringing cryptocurrency trading for individual investors and institutions under regulatory scrutiny. As Hong Kong's Financial Secretary Paul Chan mentioned in a recent Web3 event, this move aligns with Hong Kong's strategy to build a 'thriving digital asset ecosystem' while enhancing investor protection mechanisms.
On February 19, 2025, Hong Kong's Financial Secretary Paul Chan attended the opening ceremony of the Consensus conference hosted by Coindesk at the Hong Kong Convention and Exhibition Centre. This is the first time in five years that this heavyweight conference in the crypto industry has moved outside the US.
Hong Kong has adopted a diverse and pragmatic strategy. In April last year, Hong Kong became one of the first jurisdictions in the world to launch Bitcoin and Ethereum spot ETFs. In December last year, the Hong Kong government introduced a stablecoin bill requiring issuers of fiat-pegged stablecoins to maintain sufficient reserves and ensure user redemption rights, establishing one of the world's most advanced stablecoin regulatory frameworks.
At the end of November last year, Hong Kong's Financial Services and the Treasury Bureau released a consultation document proposing to exempt hedge funds, private equity funds, and family offices from taxes on cryptocurrency and other alternative asset gains, clearly signaling the strategic intent to position Hong Kong as a digital asset hub amid tensions in Sino-Western relations.
This development momentum has continued to heat up this year. In February 2025, the Hong Kong SFC released a regulatory roadmap containing 12 initiatives aimed at further promoting the development and security of the virtual asset industry. The roadmap includes a licensing system for over-the-counter (OTC) and crypto asset custody, as well as a more comprehensive insurance and compensation mechanism for virtual asset service providers.
The Hong Kong case is particularly important due to its dual strategic value. Firstly, developing a strong digital asset industry can serve as a financial hedge tool to address global financial fragmentation and uncertainty, while reducing Hong Kong's dependence on traditional banking systems that may be influenced by major power politics. If there is a division in the future international financial system, Hong Kong can still rely on cryptocurrency infrastructure, including stablecoins, to continue providing channels for capital flow.
Secondly, developing the digital asset industry has become an important engine for driving financial innovation and long-term competitiveness. Hong Kong has not only issued the world's first government-led tokenized green bond but has also launched a pilot project for e-HKD to explore the development path of central bank digital currency. Meanwhile, local banks and fintech companies are actively testing the application of blockchain in scenarios such as credit, trade finance, and clearing and settlement.
In an era of dramatic changes in the global alliance landscape, Hong Kong's engagement with cryptocurrencies is not only a risk hedge but also a strategic investment in future financial leadership.
As the global economy becomes increasingly fragmented, with rising tariff barriers and traditional alliances shaken, the market's demand for borderless, neutral financial instruments is also rapidly growing. As a product born out of the 2008 global financial crisis, crypto assets are designed to address an era filled with uncertainty.
The next financial shock—whether it be a currency crisis, data channel blockade, or weaponization of payment networks—will test the maturity of these alternative financial channels. However, various signs are emerging: capital is accelerating into the market, institutions are adapting, and regulatory pioneers like Hong Kong are consciously advancing their layouts.
We may be standing at the starting point of a historic reconstruction of reserve assets. Not to replace the US dollar, but to hedge its limitations—a low-profile, gradually mainstream alternative.
