Concerning Stablecoins! The Financial Secretary of Hong Kong recently made statements.

The Financial Secretary of Hong Kong, Paul Chan, has recently expressed many important views on stablecoins, mainly focusing on the positioning, regulatory policies, and development directions of stablecoins, as follows:

Clarifying the Positioning of Stablecoins: Paul Chan emphasized that stablecoins are essentially a payment tool aimed at addressing long-standing pain points such as slow cross-border payment speeds, high costs, and low efficiency. Its core value lies in serving the real economy as an alternative to the traditional financial system, with the potential to reshape payment and capital market activities.

Emphasizing Regulation and Compliance: The 'Stablecoin Ordinance' was passed by the Hong Kong Legislative Council on May 21 and will come into effect on August 1. After the ordinance takes effect, the Hong Kong Monetary Authority will process license applications as soon as possible, promoting compliance businesses to operate. Issuers are required to apply for a license from the Hong Kong Monetary Authority and meet minimum capital requirements of HKD 25 million, 100% high liquidity asset reserves, and unconditional redemption. Additionally, issuers must comply with a series of risk management and anti-money laundering requirements and provide specific business justifications, such as use cases, explaining how their stablecoin business can practically address pain points in economic activities.

Promoting Application Scenario Expansion: Paul Chan stated that the Hong Kong Special Administrative Region government and financial regulators will strive to create a favorable market environment, along with necessary regulatory measures, to promote issuers to extend the application of stablecoins to different scenarios, helping to address substantial pain points in business operations and citizens' lives. The 'Hong Kong Digital Asset Development Policy Declaration 2.0' proposes 'promoting application scenarios and cross-sector cooperation,' emphasizing that stablecoins have the potential to bring about changes in payment and capital market activities, including cross-border payments.

Elaborating on Strategic Significance: Paul Chan believes that the stablecoin ecosystem will attract global capital and technology to converge in Hong Kong, helping Hong Kong become the world's largest cross-border asset management center within 2-3 years. Through the 'multi-currency pegging + value regulation' model, Hong Kong allows pegging to currencies such as the Chinese Yuan and US Dollar, which not only avoids reliance on a single dollar but also provides a buffer for the mainland's exploration of offshore RMB internationalization pathways, while also consolidating Hong Kong's status as an international financial center.