From May 5 to May 21, Hong Kong passed the 'Stablecoin Regulation Draft', which essentially sets rules for companies issuing 'stablecoins' to make the industry safer and more orderly. Let's break it down into several key points:

1. From now on, issuing coins requires a 'license'

Just like driving a taxi requires a license, any company wishing to issue stablecoins in Hong Kong (especially those pegged to the Hong Kong dollar) must apply for a license from the government. The government will review whether these companies have sufficient reserves to ensure that users can exchange their coins for real money at any time. This way, those companies that indiscriminately print money without real backing will be unable to benefit from the situation.

2. Preventing scams and collapses

In the past, some stablecoin projects have collapsed (for example, Terra coin plummeted overnight), resulting in many people losing their investments. This regulation requires companies to keep user funds separate from their own funds, and they must regularly publish audit reports, effectively adding a safe deposit box for users' money. If someone violates the rules, they will face penalties, and in severe cases, be shut down.

3. Protecting the status of the Hong Kong dollar

Hong Kong has special regulations: any stablecoin pegged to the Hong Kong dollar, whether issued in Hong Kong or abroad, must comply with Hong Kong's rules. This is akin to Hong Kong planting a flag in the digital currency space, telling everyone: 'For Hong Kong dollar stablecoins, I call the shots!' If Hong Kong eventually launches its own digital Hong Kong dollar (e-HKD), this path will be paved.

4. Competing with the United States

The United States has just passed its own stablecoin legislation, and Hong Kong quickly followed suit two days later, clearly aiming to compete for influence. To put it simply, it's like two tech giants releasing new products simultaneously, both wanting to set industry standards. If Hong Kong can attract mainstream stablecoins like USDC to settle here, the Web3 (next-generation internet) ecosystem will be even more complete.

Impact on ordinary people

In the short term, buying stablecoins will be safer, with no worries about sudden devaluation; in the long term, Hong Kong may become the cryptocurrency center of Asia, attracting more financial innovation projects, and providing ordinary people with more investment and financial planning options. However, those smaller companies that do not follow the rules may be eliminated, leading to a market that is more concentrated among a few reliable large institutions.