Author: Yin Mo Xing Chen
Reprinted: White55, Mars Finance
Regarding digital stablecoins, several landmark events occurred in the past month:
The first comprehensive regulatory framework for stablecoins in the U.S., the Guiding and Establishing National Innovation for U.S. Stablecoins Act (abbreviated as the GENIUS Act), was passed by the Senate committee in May 2025, bringing it closer to formal legislation.
The Legislative Council of Hong Kong also officially passed the regulatory legislation for digital stablecoins in May 2025.
Former Vice President of the Bank of China Wang Yongli suggested at the Tsinghua Wudaokou Global Finance Forum in May 2025 that mainland China should give greater attention to the development of stablecoins from both industry and academic perspectives.
The first publicly listed company in the stablecoin space, Circle, was listed on the New York Stock Exchange on June 5, 2025, with a stellar performance on its first day of trading, soaring from an opening price of $31 to $69, peaking at $103.75 during trading, and eventually closing at $83.23, up 168% from the issuance price.
Additionally, there is an industry perspective that stablecoins pegged to the U.S. dollar extend the dollar's hegemony into the digital currency space, while stablecoins pegged to the Hong Kong dollar represent a way to implement the internationalization strategy of the Chinese yuan (with underlying assets potentially including Chinese government bonds in the future).
Although JD's stablecoin is issued in Hong Kong, it can still be considered an active exploration by China in the digital currency field. This article attempts to analyze the background, progress, and technical implementation of JD's issuance of digital stablecoins in Hong Kong, assess the impact on JD itself, Hong Kong, and mainland China, and discuss the profit models, policy environment, and global trends of digital stablecoins (including the U.S., Europe, Singapore, etc.).
1. Current progress overview
JD Group's JD Coin Chain Technology (Hong Kong) Co., Ltd. is actively promoting the pilot issuance of a Hong Kong dollar stablecoin, aiming to enhance cross-border payment capabilities and serve the real economy. As early as December 2023, the Hong Kong SAR government announced plans to legislate a licensing system for stablecoin issuers to align with financial innovation trends. Under the guidance of the group's overseas business strategy, JD Coin Chain Technology team has conducted in-depth research in the Web3 field, discovering that issuing payment-type stablecoins via blockchain can solve its own cross-border settlement challenges and serve other businesses, bringing significant economic and social benefits. Therefore, JD initiated the license application in Hong Kong immediately, and after about a year of effort, successfully became one of the first participants in the 'Stablecoin Issuer Sandbox' announced by the Hong Kong Monetary Authority (HKMA) in July 2024. This group of participants includes JD Coin Chain Technology, RD Technologies, and a consortium formed by Standard Chartered Bank (Hong Kong), Animoca Brands, and Hong Kong Telecom. Starting in the second half of 2024, JD's stablecoin will enter the HKMA sandbox testing, with the second phase of testing currently focusing on PC and mobile applications for retail and institutional users, emphasizing cross-border payments, investment transactions, and daily retail consumption scenarios.
The JD stablecoin project has received recognition and guidance from Hong Kong regulators. Through the regulatory sandbox, the HKMA allows institutions interested in issuing stablecoins in Hong Kong to test their plans and communicate bidirectionally with regulators, providing a basis for the formal regulatory system formulation. JD Coin Chain Technology actively maintains close communication with the Hong Kong Monetary Authority and collaborates with regulatory agencies in other regions to promote global compliance expansion of stablecoin business. Currently, JD's stablecoin has not yet been officially issued to the public, and the official emphasizes that there are no purchase channels available, reminding the public to be wary of related scam information. According to the company's responsible person Liu Peng, JD's stablecoin is in the late testing phase of the sandbox and is expected to launch in the market once Hong Kong officially issues licenses. The overall timeline shows: end of 2023, Hong Kong formulates stablecoin regulatory framework → July 2024, JD enters sandbox pilot → May 2025, Hong Kong Legislative Council passes (Stablecoin Regulations) → mid-2025, JD stablecoin completes multiple rounds of testing, and issuance is imminent.
In the process of project advancement, JD closely collaborates with regulatory and industry partners. The Hong Kong Monetary Authority launched a stablecoin issuer sandbox pilot in March 2024, and by July 2024, it had received inquiries and applications from dozens of institutions. In addition to JD, the first batch of sandbox participants includes RD Technologies, which issues the Hong Kong dollar stablecoin 'HKDR,' and a joint venture project led by Standard Chartered Bank (Hong Kong) for the Hong Kong dollar stablecoin. In terms of regulation, institutions like the HKMA, the Financial Services and Treasury Bureau, and JD Coin Chain Technology maintain communication to ensure the project meets regulatory requirements. JD is also exploring collaboration opportunities with traditional financial institutions such as Standard Chartered Bank (Hong Kong) to jointly improve the application ecosystem for stablecoins. Notably, the Hong Kong financial regulator will officially implement the (Stablecoin Regulations) on May 30, 2025, marking a step closer for JD and other pilot institutions to formal licensed issuance. Supported by the regulatory sandbox, the JD stablecoin project is progressing steadily, laying the groundwork for the next stage of formal issuance.
2. Strategic significance
For JD Group, issuing a digital stablecoin holds significant strategic value.
On one hand, stablecoins can serve as the payment infrastructure for JD's global business, addressing pain points in cross-border payment settlements. JD Coin Chain Technology CEO Liu Peng stated that stablecoins have certain monetary properties and also possess the technological advantages of digital assets, which can compensate for the volatility issues of traditional cryptocurrencies, emerging in the payment field. The positioning of JD's stablecoin is not limited to serving JD's own e-commerce ecosystem but aims to provide more efficient, low-cost, and secure payment solutions for global enterprises and individuals. By mastering the bridge between fiat currency and cryptocurrency exchanges, JD is expected to gain an advantage in cross-border e-commerce and overseas market acquiring settlements.
Additionally, the issuance of stablecoins can also bring resources and benefits to JD's fintech sector, such as obtaining interest income from user deposit funds, enhancing transaction data accumulation, etc.
Overall, the stablecoin project helps solidify JD's position as a technology-driven service company and expand its fintech landscape.
For Hong Kong's international financial center, JD's choice to issue stablecoins in Hong Kong highlights Hong Kong's unique value in digital currency experimentation.
The Hong Kong SAR government has actively embraced virtual assets and the Web3 industry in recent years, aiming to consolidate Hong Kong's position as an international financial center. The passage of the (Stablecoin Regulation) and the promotion of sandbox pilots make Hong Kong the first jurisdiction in the world to establish a comprehensive regulatory framework for fiat-backed stablecoins. This is significant for Hong Kong: firstly, stablecoins, as representatives of digital financial infrastructure, are expected to enhance the innovative vitality and competitive advantage of Hong Kong's financial market; secondly, the stablecoin pilot has attracted participation from well-known domestic and foreign enterprises, including JD and Standard Chartered, driving capital market attention towards related concepts; thirdly, by taking the lead in regulating stablecoins, Hong Kong can gain a certain voice in the formulation of international rules.
Some analyses suggest that the development of stablecoins essentially extends the dominance of the U.S. dollar into the crypto space; whoever sets the rules can gain an advantage in the reshuffling of the currency system in the future. Therefore, Hong Kong's bet on stablecoins is expected to play a key role in the next round of financial transformation.
The Hong Kong stablecoin experiment also provides enlightening implications for the development of digital finance in mainland China.
Currently, mainland China maintains a strict regulatory attitude towards cryptocurrencies and stablecoins, primarily advancing the implementation of central bank digital currency (digital renminbi). However, Hong Kong's practices demonstrate that under a compliance framework, stablecoins can serve as payment tools rather than purely speculative assets, and the regulatory logic is shifting to view them as part of financial infrastructure. Citic Securities research report indicates that the advancement of stablecoin legislation in Hong Kong and the U.S. will provide a stable trading medium for the tokenization of real assets, facilitating mainland enterprises to issue real-world asset (RWA) projects in Hong Kong.
At the same time, the implementation of stablecoin policies is expected to indirectly promote cooperation between Hong Kong and the mainland in the construction of interfaces for digital renminbi cross-border settlements and supply chain finance. JD's Liu Peng also revealed that the team is actively researching the possibility of issuing stablecoins linked to offshore renminbi to provide new tools for the cross-border circulation of the renminbi, but this requires communication with mainland regulators.
It is foreseeable that the successful pilot of Hong Kong's stablecoin will provide a sample for mainland observations: on one hand, validating the practical benefits of digital currencies in trade settlements and consumer payments; on the other hand, compelling the mainland to consider how to safely absorb the advantages of stablecoins into the future digital financial system. For instance, it is not ruled out that digital renminbi may reference stablecoin mechanisms in the future, enhancing cross-border usability and programming functions.
In summary, the Hong Kong stablecoin project, as a 'frontier testing ground,' will influence the direction of digital financial regulation and innovation in mainland China.
3. Technical implementation
3.1. Technical architecture and underlying chain selection
JD's stablecoin is issued using blockchain technology architecture, based on a public blockchain (Public Blockchain) digital token. According to project leaders, JD's stablecoin will peg to the Hong Kong dollar (HKD) to maintain value stability at a 1:1 ratio. This means that for every JD stablecoin issued, there is an equivalent reserve asset of 1 Hong Kong dollar backing it.
Choosing a public chain as the underlying framework aims to leverage the distributed ledger, peer-to-peer transmission, and programmable characteristics of blockchain to achieve transparent value flow and rapid settlement. At the same time, using mainstream public chains enhances the compatibility of the stablecoin, facilitating integration with different wallets, trading platforms, and applications.
The specific public chain name currently has not been disclosed, but it is speculated to be based on mature chains like Ethereum or an upgraded regulatory-compliant consortium chain architecture developed by JD to balance performance and compliance requirements.
3.2. Anchoring mechanism and reserve custody
As a fiat-backed stablecoin, JD's stablecoin adopts a 100% full reserve anchoring mechanism, meaning that every unit of token has high-quality, highly liquid assets as reserves to ensure price stability and that holders can redeem at face value.
According to information from JD Coin Chain Technology and RD Technologies' official websites, the two upcoming Hong Kong dollar stablecoins are pegged 1:1 to the Hong Kong dollar, with reserve assets consisting of highly liquid assets, held in independent accounts of licensed financial institutions and made available for external inquiry through regular disclosure reports. This means that JD's stablecoin reserves may mainly consist of cash and bank deposits, short-term government bonds, and other low-risk assets, held in recognized custodial bank accounts, isolated from the issuer's own funds. This custodial arrangement can prevent the issuer from misappropriating reserves and protect the rights of holders.
Hong Kong regulations require stablecoin issuers to redeem holders' tokens at face value at any time. Therefore, JD's stablecoin has designed a comprehensive redemption mechanism: users can submit redemption requests, and the issuer promises to exchange at a reasonable time at the value of fiat currency. Meanwhile, the system will record the issuance and recycling process through smart contracts or back-end systems to ensure that the number of on-chain tokens corresponds in real time with the reserve assets.
3.3. Cross-border payments and smart contract mechanisms
One of the key technical implementations of JD's stablecoin is its application in cross-border payment scenarios.
By leveraging the peer-to-peer transmission characteristics of blockchain, funds clearing between two locations can bypass traditional multi-level intermediaries, achieving near real-time arrival and reducing cross-border remittance fees and exchange rate costs. JD has revealed that testing scenarios include cross-border trade payments and retail payments. For example, in cross-border e-commerce, overseas consumers can directly use JD stablecoins for payment, saving on exchange fees compared to credit card channels; suppliers can also promptly recover payments through stablecoins, accelerating capital turnover.
In addition, JD is testing stablecoin payments with its online mall in Hong Kong and Macau, which is expected to solve previous issues of slow settlements and high fees in retail payments.
In terms of smart contract mechanisms, stablecoins, as blockchain tokens, are inherently programmable. This means that businesses can integrate stablecoins into smart contracts to achieve automated payments and financial innovations. For example, in supply chain finance, contracts can be written to automatically release stablecoin payments to suppliers once the logistics system confirms receipt, reducing human intervention and credit risk. Similarly, in gaming or digital asset trading, stablecoins can serve as a settlement medium, enabling instant clearing and profit-sharing through contracts.
JD's stablecoin is also expected to support basic compliance functions, such as blacklisting and freezing features to meet anti-money laundering and sanctions requirements (similar to the practices of mainstream stablecoin USDC).
Overall technical solutions for JD's stablecoin balance openness and compliance by combining on-chain and off-chain methods, leveraging the advantages of blockchain for cross-border circulation and high availability while meeting regulatory requirements in terms of reserve custody, information disclosure, and establishing a technical foundation for subsequent large-scale applications.
4. Profit models of digital stablecoins
4.1. Seigniorage and interest income
The primary source of profit from issuing stablecoins is seigniorage or interest income.
Essentially, holders exchange fiat currency for stablecoins, which means that issuers gain a pool of interest-free funds. Issuers can invest this reserve in low-risk interest-bearing assets, thus earning interest differentials.
Looking at the global stablecoin examples, due to rising interest rates in recent years, stablecoin issuers have seen significant profit increases. According to Circle, the USDC stablecoin generated only $28 million in interest income in 2021, while it is expected to surge to $2.1 billion in 2023. This reflects that when interest rates rise, issuers holding substantial reserves can obtain considerable interest income. Similarly, Tether (the issuer of USDT) reported astonishing profits—with a net profit of approximately $2.2 billion in the first half of 2023, primarily from the interest income of U.S. Treasury bonds it holds.
For JD's stablecoin, if the issuance scale reaches the tens of billions level, even if the reserves are invested in short-term deposits or government bonds yielding 2-5% annually, it could generate interest income of tens of millions or even over a hundred million Hong Kong dollars per year. After deducting operational costs, this part of income constitutes the seigniorage profit of the stablecoin business.
Of course, according to Hong Kong regulatory requirements, how reserve income is allocated and whether there is a need to partially return to users still awaits clarification in regulatory details. However, from international experience, most stablecoin issuers treat interest income as a primary profit point.
4.2. Value-added services and ecological effects
In addition to passive interest income, stablecoins can also bring various active profit models and strategic benefits.
First, there are transaction and exchange fees.
Issuers may charge small fees for the issuance, redemption, or large transfers of stablecoins. For example, certain stablecoins may charge a redemption fee of 0.1% to 0.2%, and management fees for large institutional clients, creating revenue for the company.
Secondly, cross-border settlement and payment services can generate added value.
If JD's stablecoin is widely used for cross-border e-commerce and supply chain payments, JD could offer exchange services, wallet custody, payment gateways, and other value-added services based on stablecoins, charging service fees to corporate clients. For example, enterprises can exchange domestic RMB for JD's stablecoin for payments, allowing JD to profit from the exchange rate spreads.
Again, there are opportunities in the supply chain finance sector.
JD can utilize the stablecoin platform to provide financing, factoring, and other services to upstream and downstream suppliers. When suppliers hold stablecoin receivables, JD Finance might offer discounts or loans, in stablecoin or fiat currency, earning interest or fee differentials. The transparent and traceable nature of stablecoins reduces risk control costs, making this model more efficient.
In addition, the ecological effects brought by stablecoins may be implicit but profound.
For instance, it can enhance user stickiness and retention—consumers and merchants are more likely to enter JD's ecosystem due to the use of JD stablecoins, driving growth in marketplace transaction volumes. Additionally, JD's stablecoin may promote data accumulation, with the collection and analysis of vast cross-border transaction data feeding back into JD's risk control and marketing, indirectly creating value.
It is worth mentioning that the layout of mainstream payment giants confirms the importance of stablecoin ecological effects. For example, PayPal launched the stablecoin PYUSD and provided an annual yield incentive of 3.7% to holders, aiming to cultivate user habits and profiting in the future through transaction fees and capital accumulation.
Overall, the profit model of stablecoins is diverse—short-term gains include seigniorage and direct income, while long-term implications focus on the strategic significance for the payment landscape and financial ecosystem. Once JD's stablecoin is widely adopted, it will further solidify JD's position in the infrastructure of cross-border e-commerce and digital finance, which in itself will translate into significant commercial value.
5. Hong Kong's policy environment
5.1. Stablecoin regulations and licensing system
On May 21, 2025, Hong Kong's Legislative Council passed the (Stablecoin Regulation Draft), which officially took effect on May 30, becoming the first law in Asia to systematically regulate fiat-backed stablecoins. The regulation establishes a licensing system for stablecoin issuers, which will be implemented by the Monetary Authority of Hong Kong (i.e., HKMA).
The regulations stipulate that any stablecoins issued in Hong Kong that are pegged to the value of fiat currency, or issued overseas but claiming to be pegged to the Hong Kong dollar, must apply for a license from the Monetary Authority. This means that regardless of whether the currency is Hong Kong dollars, U.S. dollars, or other fiat currencies, as long as they are issued in Hong Kong or pegged to the Hong Kong dollar, they fall under regulation. Licensing applications must meet strict requirements, including:
Reserve Asset Management: Issuers must establish a robust reserve mechanism to ensure they hold sufficient, highly liquid reserve assets to support the value of the stablecoin, with assets kept separate from customer funds. They must also maintain a sound anchoring mechanism to ensure that redemption requests can be fulfilled at a 1:1 ratio at any time.
Redemption Obligations: Licensed issuers must clarify the rights of holders to redeem at face value and handle redemption requests within a reasonable time. This is a key protective measure for investor rights, ensuring that stablecoins are truly 'stable and trustworthy.'
Risk and Compliance: Issuers must comply with a series of anti-money laundering/counter-terrorism financing (AML/CFT) requirements and establish a comprehensive risk management system. There are also clear obligations for information disclosure and auditing, such as regularly disclosing reserve status and undergoing external audit verification. Additionally, there are suitability requirements for key personnel such as directors and executives to ensure that the management team is competent and has no adverse records.
After the implementation of the regulations, to strengthen investor protection, Hong Kong only allows designated licensed institutions to sell fiat-backed stablecoins in the region, and only licensed stablecoins can be offered to retail investors. During the transition period, the regulations grant existing practitioners a 6-month 'non-violation period' to apply for licenses and rectify their businesses. During this period (and at any time), only advertisements for already licensed stablecoin issuers are allowed, and unlicensed institutions are prohibited from marketing to prevent fraud. The Secretary for Financial Services and the Treasury, Xu Zhengyu, emphasized that the regulations embody the principle of 'same activities, same risks, same regulation,' creating a robust regulatory environment that aligns with international standards and strengthens Hong Kong's status as an international financial center.
5.2. Sandbox policies and latest developments
Before the regulations are implemented, Hong Kong has actively guided the development of stablecoins through regulatory sandboxes.
The Monetary Authority of Hong Kong announced stablecoin regulatory intentions at the end of 2023 and officially launched the 'Stablecoin Issuer Sandbox' plan in March 2024. The first batch of pilot participants was announced on July 18, 2024, including JD Coin Chain Technology among three groups of entities. The sandbox allows selected institutions to test their stablecoin technology and operational plans according to proposed regulatory requirements before the formal implementation of the licensing system and communicate bidirectionally with regulators.
Through this mechanism, Hong Kong regulators can timely identify and resolve potential issues, providing a basis for the development of regulatory details. For example, regarding problems identified in testing, such as cybersecurity, smart contract vulnerabilities, and redemption processes, regulators can propose improvement requirements. Under the sandbox framework, JD's stablecoin has tested various scenarios including cross-border payments, supply chain management, and in-game payments, demonstrating the broad applicability potential of stablecoins.
After the ordinance came into effect on May 26, 2025, the HKMA further released consultation documents to formulate detailed regulatory guidelines, including reserve management, issuance and redemption processes, corporate governance, etc., providing clear compliance standards for licensed stablecoin issuers. These measures indicate that Hong Kong is steadily transitioning from sandbox experiments to licensed regulatory phases: it is expected to issue the first batch of stablecoin issuance licenses within the year, and licensed institutions will need to operate strictly according to the guidelines.
Overall, Hong Kong's policy environment has adopted a cautiously open attitude towards stablecoins: actively introducing market participants to experiment through sandboxes and accumulating experience on one hand; while rapidly constructing a legal framework to safeguard large-scale commercial use on the other hand. This pilot-first, legislation-later model is viewed as a balance between encouraging financial innovation and maintaining financial stability. It is no wonder that after the announcement of the regulation, related concept stocks in Hong Kong received high market attention—clarity in regulation is seen as a milestone in the industry’s development.
5.3. Coordination of regulatory agencies and details of the licensing system
In Hong Kong, the regulation of stablecoins is primarily led by the HKMA, while coordinating with the Securities and Futures Commission (SFC) for division of responsibilities.
Since fiat-backed stablecoins are closer to payment tools or deposit substitutes, the HKMA has assumed the primary regulatory responsibilities, viewing stablecoins as an integral part of financial market infrastructure. The SFC continues to monitor virtual asset trading platforms, requiring platforms trading listed stablecoins (such as USDT, USDC, etc.) to conduct due diligence to ensure the safety and compliance of the traded stablecoins.
Under the new regulatory framework, only licensed banks, licensed stored-value payment tool providers, or specially approved companies can offer stablecoin services to the public. This means that if technology companies like JD obtain stablecoin issuance licenses, they will also need to accept ongoing supervision from the Monetary Authority during operations, similar to the management models of banks and payment institutions. License applications are expected to meet minimum capital requirements, business plan reviews, risk assessments, and other conditions, making them not easily obtainable.
Another recent policy dynamic is Hong Kong's participation in discussions on cross-border stablecoin cooperation: exploring whether the Guangdong-Hong Kong-Macau Greater Bay Area can use stablecoins to enhance cross-border payment efficiency, and how Hong Kong stablecoins can interface with the mainland's digital renminbi pilot, providing more choices for cross-border consumption for residents of both regions.
These all indicate that Hong Kong is incorporating stablecoins into its financial innovation strategy, with a maturing and improving regulatory environment.
6. International comparative analysis
6.1. Global regulatory competition and trends
Currently, major economies around the world are accelerating the establishment of stablecoin regulatory frameworks, presenting a synchronized competition scenario.
Statistics show that more than a dozen countries and regions worldwide have officially launched stablecoin regulatory regulations or legislative drafts, marking an acceleration of stablecoin legislation from regional experiments to a global unified framework. A consensus is gradually forming among regulators: viewing stablecoins as payment tools rather than purely speculative assets, and formulating regulatory logic with the mindset of financial infrastructure. Under this trend, Hong Kong, the U.S., the EU, Singapore, and others have relevant legislation or clear guidelines. Next, we will summarize the policy trends and typical cases in the U.S., Europe, Singapore, etc., to compare with Hong Kong's approach.
6.2. United States: Regulatory exploration and market practice progress in tandem
For a long time, the U.S. has lacked federal-level legislation specifically for stablecoins, with regulation primarily relying on existing financial rules (such as money transfer licenses, bank custody requirements, etc.). However, since 2023, the U.S. Congress has begun to actively promote stablecoin legislation. The latest development is that the Senate passed the GENIUS Act with a vote of 66 to 32, establishing the first unified federal regulatory framework for stablecoins. This act is expected to require stablecoin issuers to obtain federal licenses, meeting conditions such as reserve audits, timely redemptions, and risk monitoring. This marks an important step towards federal unification in regulation from the previous state-by-state approach.
However, before the formal implementation of the bill, the U.S. market primarily relies on industry self-regulation and law enforcement: New York State has imposed requirements through the BitLicense system for stablecoin custodians to hold trust licenses, with issuers like Circle (USDC issuer) and Paxos (PYUSD issuer) operating under New York regulations. The U.S. Office of the Comptroller of the Currency (OCC) has also stated that federal banks can issue stablecoins for payment settlements, but must meet 100% reserve requirements.
In market terms, the U.S. has the world's largest stablecoins: Tether (USDT) and USD Coin (USDC) occupy the first and second positions in the stablecoin market, respectively, with a combined market value of approximately $214 billion, accounting for about 90% of the global total. Under the immense market demand, stablecoins have become the main liquidity tools for multiple cryptocurrency exchanges, with an average monthly on-chain trading volume reaching $40 trillion, far exceeding the total credit card transactions of Visa and Mastercard.
This pattern of 'developing first and regulating later' has prompted payment giants to also test the waters: PayPal issued the dollar-pegged stablecoin PYUSD in August 2023, becoming the first dollar stablecoin launched by a regulated financial institution; Visa, Mastercard, and others are collaborating with institutions to trial USDC for settlements in cross-border payments. Federal Reserve officials maintain a cautious stance towards private stablecoins, fearing their impact on payment system stability, but also acknowledge the potential of stablecoins to enhance payment efficiency.
In general, the United States is transitioning from a market-driven approach to a regulatory framework implementation phase: once federal laws are enacted, it is expected to grant clearer legal status to compliant issuers like Circle and Paxos while deterring market violators (like the early situation of Tether with insufficient reserves). The regulatory experience of the U.S. also influences the formulation of international standards, making it possible for stablecoins to be integrated into the mainstream financial system.
6.3. Europe: MiCA regulations lead to comprehensive regulation
The EU is leading in stablecoin regulation, with the (Markets in Crypto-Assets Regulation) (MiCA) officially passed in 2023 and set to gradually take effect from late 2024 to 2025. MiCA sets detailed and stringent regulatory requirements for stablecoins (referred to as electronic money tokens EMT and asset-referenced tokens ART). Its core measures include:
Issuance licenses—any stablecoin offered to EU users must be authorized in the EU, and the issuer must publish a crypto asset white paper approved by regulatory authorities;
Reserve requirements—stablecoin issuers are required to hold safe, low-risk assets as reserves, with the reserve value needing to equal at least the value of the circulating stablecoins and report regularly to regulators;
Redemption and Rights—holders have the right to redeem stablecoins for fiat currency at a 1:1 ratio at any time, and the issuer cannot refuse, nor is it allowed to provide any form of interest or returns to holders to avoid inducing speculation.
Operational restrictions—issuers must meet strict governance requirements, avoid conflicts of interest, and are subject to marketing restrictions, prohibiting exaggeration or misleading information.
MiCA also sets special rules for significant stablecoins, such as when the circulation scale or trading volume exceeds certain thresholds, issuers will face higher capital requirements and stricter scrutiny to prevent impacts on the financial stability of the Eurozone.
Under MiCA, traditional financial institutions in Europe have begun to layout: Société Générale issued a euro stablecoin (EUR CoinVertible), becoming the first approved bank stablecoin; exchanges such as Binance have announced plans to gradually guide European users towards compliant stablecoins, restricting the use of unauthorized stablecoins. The European Central Bank is also continuously evaluating the digital euro project, forming a complementary competitive relationship with private stablecoins.
Overall, the EU's MiCA provides the most comprehensive and detailed regulatory framework for stablecoins to date, and is referred to as a 'regulatory benchmark for the global market.' For stablecoin issuers looking to enter the EU market (including JD from Hong Kong), MiCA means they need to establish a presence in the EU to apply for a license and comply with information disclosure and reserve audit obligations. This undoubtedly increases compliance costs but also ensures the safety and user confidence of stablecoins in the EU.
Compared to Hong Kong's focus on Hong Kong dollar stablecoins, MiCA covers all fiat currency stablecoins, reflecting the breadth and unity of regulation and is an important case worthy of attention in international comparisons.
6.4. Singapore: Clear standards for single currency stablecoins
Singapore, as a financial center in Asia, has also rapidly improved its stablecoin regulatory framework. In August 2023, the Monetary Authority of Singapore (MAS) released a new stablecoin regulatory framework applicable to single currency stablecoins pegged to the Singapore dollar or G10 currencies, which must comply with regulations when issued in Singapore.
The main requirements of the framework include:
Value Stability—stablecoins must have high-quality assets as 100% reserves to ensure that in extreme situations, they can still maintain a 1:1 peg with the underlying fiat currency;
Capital requirements—issuers must hold no less than 1 million Singapore dollars or capital equal to 50% of their annual operating expenses (whichever is higher) to provide a financial buffer;
Redemption timeliness—holders must be provided with timely redemption, with a redemption period not exceeding 5 business days to ensure liquidity;
Asset custody and independent auditing—reserve assets must be held in recognized financial institutions and verified for adequacy by independent auditors monthly, with reports issued;
Investor Rights—issuers must transparently disclose the details of stablecoin mechanisms and bear legal responsibility for misleading white paper content.
The MAS stipulates that stablecoin issuers can apply for operations through existing licensing categories under the (Payment Services Act), such as obtaining a 'major payment institution' license and indicating stablecoin business. This provides a legal basis for stablecoin issuance in Singapore, aligning it with digital payment regulations.
Additionally, Singapore has also taken the lead in promoting central bank digital currencies (CBDCs) and exploring cross-border payment interoperability; the MAS has experimented with using stablecoins and CBDCs for cross-border settlements (Project Ubin, etc.).
Currently, Singapore has seen projects like Xfers' XSGD (Singapore dollar stablecoin), but their scale is relatively limited.
Looking ahead, Singapore's advantages lie in its open financial environment and sandbox mechanism. The MAS has stated it welcomes regulated stablecoin innovations while closely monitoring international developments and dynamically adjusting regulatory details to maintain both financial stability and encourage fintech innovation.
Singapore and Hong Kong share commonalities in stablecoin regulation, such as using 100% high liquidity assets (cash or short-term government bonds, etc.) as reserves, ensuring 100% redemption assurance, risk control, etc.
There are also clear differences: Singapore focuses more on single currency stablecoins pegged to the local currency and major foreign currencies; while Hong Kong explicitly allows only stablecoins pegged to the Hong Kong dollar, and clearly states that any stablecoin pegged to the Hong Kong dollar, regardless of whether it is issued in Hong Kong or outside, must be regulated by the HKMA.
7. Industry giants' dynamics
PayPal launches PYUSD, as traditional payment giants enter the field.
In August 2023, global third-party payment giant PayPal officially released the PayPal USD (PYUSD) stablecoin, the first dollar stablecoin launched by a large payment company. PYUSD is issued by Paxos under the trust of New York, pegged 1:1 to the dollar, with reserves consisting of U.S. dollar deposits, short-term U.S. Treasury securities, and other safe assets to ensure that holders can redeem at any time for 1 dollar. PayPal has integrated PYUSD into its wallet app, allowing users to buy, sell, hold, and transfer PYUSD just as they would with a balance.
Its strategic goal is to integrate blockchain technology into mainstream payment networks: with PYUSD, PayPal users can conduct low-cost, near real-time cross-border transfers and payments. For example, a U.S. user can exchange U.S. dollars for PYUSD and send it to a friend abroad, who can instantly receive it and exchange it for local currency without the high costs of traditional remittances. PayPal's involvement is seen as a landmark event for stablecoins, indicating that Wall Street and Silicon Valley are beginning to embrace crypto payments.
To promote the adoption of PYUSD, PayPal announced in 2024 that it would offer U.S. users holding PYUSD an annual yield reward of 3.7% (paid in PYUSD), effectively paying interest on stablecoin balances to encourage users to retain more funds. This move demonstrates PayPal's willingness to exchange short-term costs for user acceptance of its stablecoin ecosystem, with plans to profit through transaction fees in the long term.
Currently, the application scope of PYUSD is still relatively limited, primarily circulating within PayPal's own network, gradually expanding to some decentralized exchanges and crypto platforms. However, PayPal's influence and customer base provide great potential for PYUSD: in the future, it could be used for merchant settlements, allowing merchants to receive payments in PYUSD and avoid credit card fees, or for cross-border e-commerce payments, improving capital turnover efficiency.
It is foreseeable that PayPal's involvement will prompt more traditional payment companies to evaluate similar actions, as stablecoins are transitioning from tools of the crypto industry to a part of mainstream payment innovation.
Stripe integrates stablecoin payments, accelerating global services.
Another payment giant, Stripe, has chosen to enter the digital currency space by integrating stablecoins from others. As early as April 2022, Stripe announced support for certain platforms to use USDC stablecoin for creator payment settlements, becoming one of the earliest internet financial companies to apply stablecoin payments.
Entering 2023-2024, Stripe further launched new features like stablecoin payment accounts, covering more than 100 countries globally. Specifically, Stripe's merchants can now open a stablecoin account, easily receive and hold balances of the USDC stablecoin, and convert to local fiat currency at any time. This is significant for developers and freelancers lacking U.S. dollar bank accounts: they can receive payments in USDC through Stripe, avoiding the complexities and costs of bank cross-border wire transfers, and then convert to local currency when needed. Stripe also provides API interfaces to facilitate the integration of stablecoin payment functionalities into companies' products. According to official data from Stripe, benefiting from the stablecoin program, the transaction volume of stablecoins on the Stripe platform has more than doubled compared to the end of 2023, with active monthly users exceeding 40 million. This growth confirms the strong demand for stablecoins as a vehicle for cross-border payments.
On a strategic level, Stripe acquired a startup called 'Bridge' at the end of 2023, focusing on stablecoin issuance and payment integration, with a transaction amount reaching $1.1 billion. This move is seen as Stripe preparing for a possible autonomous stablecoin or deeper crypto services in the future.
Although Stripe has not yet issued its own branded stablecoin, its actions indicate the company places great importance on the potential of stablecoins in global payments and is investing substantial resources to build the relevant infrastructure. As Stripe continues to improve its support, an increasing number of multinational corporations and platforms will be able to seamlessly utilize stablecoins for payments, settlements, salary disbursements, and other operations, significantly enhancing the decentralization and efficiency of global finance.
Adyen shifts from observation to preparation, traditional acquiring institutions embrace change.
The well-known global payment company Adyen has previously held a cautious attitude towards cryptocurrencies, but is now beginning to change its stance in the wave of stablecoins.
In the early years, Adyen held reservations about accepting cryptocurrency payments due to risk considerations. However, recently the management has realized that excessive conservatism may lead to missed opportunities as the industry trends have changed. Since the end of 2023, Adyen's management has repeatedly discussed the potential benefits of stablecoin technology for payments in public, indicating that the company is attentive to changes in customer demand. Industry analysts point out that Adyen has never blindly chased trends, and if it is now starting to discuss stablecoins, it must have seen clear market opportunities. They waited for the 'Buy Now, Pay Later' (BNPL) model to mature before entering the market, and they are similarly waiting for stablecoins to transition from concept to mature application. When major merchants start demanding embedded stablecoin payment services, Adyen will act accordingly.
Recent signs indicate that Adyen has begun technical preparations, such as upgrading payment gateways to support stablecoin settlements like USDC, and exploring pilot collaborations with Visa and others for stablecoin cross-border clearing.
It can be anticipated that if Adyen launches stablecoin-related services, it will focus more on the needs of B-end enterprises, providing a safe and compliant stablecoin payment channel, rather than issuing its own currency for speculation. Adyen's shift reflects how traditional payment giants are being compelled by the market to accept this new phenomenon.
As PayPal and Stripe are already establishing their presence, Adyen and other acquiring institutions are unwilling to lose competitive advantages and are also beginning to embrace change. This payment revolution triggered by stablecoins is gradually merging the previously distinct worlds of traditional finance and crypto finance.
8. Conclusion
The development of digital stablecoins is no longer a question of 'feasibility' but 'when will it flourish comprehensively.' With regulatory clarity gradually emerging in various countries, a new era for stablecoins is inevitable.
Let’s wait and see: Will JD leverage Hong Kong’s stablecoin to usher in a new peak of development? Or will a latecomer emerge from Hong Kong, crafting a new legend in digital stablecoins?
