Hong Kong stablecoin has some awkward aspects, with 2 main pain points.

1. Real-name KYC, user information retention for over 5 years, and more critically, a prohibition on entering DeFi scenarios and anonymous wallets. — I don't understand, since this is a stablecoin, why are the regulations so strict? I can't see the difference between this and the digital RMB that was withdrawn from the mainland earlier. Ultimately, isn't it just a variation of fiat currency? Additionally, why are US dollar stablecoins USDT and USDC so popular? Besides the special application scenarios and trading platforms, the contributions of DeFi applications cannot be overlooked. Without the earning function of DeFi, what is the motivation to hold Hong Kong dollar stablecoins? Are we really going to do KYC?!

2. Must have a license. Any institution issuing or providing fiat-backed stablecoins targeting local retail in Hong Kong must have a license. The first application round ends on September 30, with the first batch of licenses expected to be issued in early 2026. This means that USDT and USDC must apply for a license to develop in Hong Kong, following a 1:1 reserve system, and more importantly, they need to be custodied in isolation. I find it questionable; USDT will definitely not comply with this. The reserves of USDT are in Bitfinex and their own hands. How could you possibly manage hundreds of billions in government bonds? Does Tether seem foolish with so much money?

Since development is the goal, it should have been inclusive and open from the start, following traditional financial practices, which is rather pointless. Therefore, the impact of Hong Kong stablecoins on the crypto circle can be ignored; the benefits equal zero, and it may even have side effects. #稳定币热潮