Damo Xing Ziqiang: Hong Kong's new stablecoin policy is about to be implemented. Who will seize the opportunity of digital finance?

The Zhitong Finance App learned that on July 23, Morgan Stanley released the report “China's Emerging Frontiers - Asia Pacific: Seizing Hong Kong's Stablecoin Transformation Opportunities”. On August 1, 2025, the Hong Kong Stablecoin Ordinance officially came into effect, marking Hong Kong's first collision in the global stablecoin regulatory competition. As an “offshore testing ground” for exploring digital finance in mainland China, Hong Kong's move is not only reshaping the global stablecoin landscape, but also bringing new opportunities in fields such as fintech and cross-border trade. Stablecoin issuers, brokers, and fintechs with mature blockchain technology will be the first to benefit.

The main points are as follows:

Hong Kong is Beijing's stablecoin testing ground. Regulatory policies and preparations for cryptocurrency transactions will drive issuers, brokers, and fintech companies to seize early profits, while changes in banking and e-commerce are likely to be more gradual. The adoption of RMB stablecoins (CNH) is likely to lag due to China's capital controls and limited offshore RMB liquidity.

Hong Kong has become a strategic testing ground for stablecoin operations: the global stablecoin legislation competition is intensifying, and the enactment of the US “GENIUS Act” may strengthen the dominance of the US dollar. This heightens Beijing's sense of urgency to explore stablecoin applications in the digital infrastructure race. In the context of domestic cryptocurrency bans and capital controls, Hong Kong has become a strategically important offshore testing ground. The Stablecoin Act, which will come into effect in August, focuses on strengthening the stability and transparency of stablecoins and opening up a legal path for stablecoins linked to offshore RMB.

Stablecoin issuers, brokers, and fintechs with mature blockchain technology will be the first to benefit, and they can profit from issuance, trading, and escrow fees. The use of stablecoins is still focused on cryptocurrency trading, so in our opinion, stablecoin issuers that can establish better connections with popular cryptocurrency platforms are likely to succeed more quickly. Growing interest in stablecoins themselves will drive the development of crypto capital stocks, such as Futu Holdings, which has a mature cryptocurrency platform, Zhongan Online, which has a strategic ecological layout, and Hong Kong Exchanges and Clearing Limited (HKEx), which may benefit from increased global capital flows, stand out.

Traditional financial business models and e-commerce will face a gradual rather than disruptive transformation: licensed banks should act as custodians of stablecoin reserve-backed assets. However, their traditional business model is less affected because stablecoins are blockchain-based payment methods rather than interest payments and deposits that can be used for lending functions. This limits the competitive appeal of stablecoins compared to traditional banking services. Stricter regulations could also weaken the advantage of stablecoins as tokenized real-world assets. Meanwhile, while stablecoins can help address some of the pain points in cross-border e-commerce transactions, such as reducing transaction costs, enabling near-instant settlement, and round-the-clock services, their application may take time due to the dominance of existing cross-border payment tools and global regulatory uncertainty.

The development of offshore renminbi-linked stablecoins (CNH) may lag behind stablecoins linked to the US dollar and Hong Kong dollar: although Hong Kong will be a testing ground for the use of Beijing's RMB stablecoins, its development may be constrained by mainland capital controls and Hong Kong's relatively small offshore renminbi capital pool (around 1 trillion yuan). Insufficient transaction liquidity, weak network effects, competition with existing RMB cross-border settlement instruments, and lingering policy ambiguity all indicate that it will take time to increase market acceptance.

The summary section is as follows:

I. Regulation first: Why Hong Kong has become a “testing ground” for stablecoins

Stablecoins are cryptocurrencies anchored to fiat currency. Currently, the global scale has reached 250 billion US dollars, 99% of which is denominated in US dollars. With the passage of the US GENIUS Act, the global dominance of US dollar stablecoins has been further consolidated, which has allowed China to accelerate its deployment in the digital finance sector.

Hong Kong's new stablecoin policy has three major highlights: first, issuers must maintain 1:1 highly liquid reserve assets, and the funds must be managed by licensed banks; second, a minimum capital threshold of HK$25 million is set to ensure issuers' strength; and third, it is mandatory to disclose information such as the composition of reserve assets and audit reports to enhance transparency.

Compared to the US regulatory framework, Hong Kong's institutional design is more inclusive. The US only issues stablecoins from depository institutions or certain non-banking institutions, while Hong Kong allows eligible overseas companies to participate, paving the way for international players to enter the market. The Hong Kong Monetary Authority clearly stated that stablecoins should focus on real economy scenarios such as cross-border payments and supply chain finance rather than speculative transactions. The first companies included in the regulatory sandbox included JD Technology, Standard Chartered Bank, etc., covering diverse fields such as fintech, e-commerce, and traditional banking.

2. Industry trends: Who can get the first piece of cake?

The development of stablecoins will spawn a number of early beneficiaries. Issuers, brokers, and fintech companies with mature blockchain technology bear the brunt. For example, with its existing cryptocurrency trading platform, Futu Holdings is expected to quickly connect with the stablecoin business; Zhongan Online has already laid out the ecosystem ahead of schedule by participating in sandbox company RD InnoTech; and the Hong Kong Stock Exchange may increase trading volume due to increased cross-border capital flows.

The transformation of traditional financial institutions has been relatively slow. Since stablecoins do not generate interest, nor can they be used for lending like deposits, their impact on the traditional business of banks is limited. However, banks can get a share of the pie by acting as custodian of reserve assets; institutions such as Standard Chartered Hong Kong have taken the lead in entering the market.

In the field of cross-border e-commerce, stablecoins have significant advantages in low cost and instant payment, which is expected to reduce transaction costs by 90%. However, due to the maturity of existing payment systems in the European and American markets, merchants and consumers are less willing to switch, and large-scale application may be difficult to achieve in the short term. In contrast, stablecoins are likely to land faster in emerging markets where local currency fluctuations are intense.

3. RMB stablecoins: potential and challenges coexist

Although Hong Kong has opened a legal channel for RMB stablecoins (CNH), the pace of development may lag behind the US dollar and Hong Kong dollar stablecoins. There are three main constraints: first, the offshore RMB pool is only 1 trillion yuan, far lower than the onshore 300 trillion yuan, and there is insufficient liquidity; second, the supply of high-quality RMB reserve assets is unstable, which is greatly affected by central bank intervention; third, the digital yuan (e-CNY) has launched a cross-border pilot project in Hong Kong, and policy support is even stronger.

However, in the long run, RMB stablecoins still have a chance to break through. If it can be connected to the RMB Cross-border Payment System (CIPS) or expand the issuance of offshore RMB bonds, it will effectively solve application scenarios and reserve asset problems. Some analysts believe that as the opening up of China's financial market deepens, RMB stablecoins may become a new driving force for the internationalization of the RMB.

4. Risk Reminder: Cold Thinking Under the Boom

The rapid development of stablecoins also comes with risks. At the regulatory level, the global framework has not yet been unified, and differences in compliance requirements in different regions may trigger arbitrage. At the market level, stablecoins are highly tied to the cryptocurrency market. 80% of transactions are for cryptocurrency trading pairs. If the crypto market fluctuates, it may trigger a chain reaction.

Furthermore, the potential impact of stablecoins on traditional financial systems cannot be ignored. Bank for International Settlements research shows that if stablecoin issuers sell $3.5 billion of US Treasury bonds, it could increase yields by 6-8 basis points, which means their influence on the global interest rate market is growing.

5. Future outlook: the value of Hong Kong's “two-way bridge”

Hong Kong's stablecoin layout is not only a strategic choice for China to deal with global digital finance competition, but also a key step in consolidating its position as an international financial center. As more institutions enter the market, stablecoins may reshape the cross-border investment process — future investors may be able to seamlessly trade 24 hours a day through the “USD stablecoin → HKD stablecoin → Hong Kong stock” chain.

For ordinary users, the changes brought about by stablecoins are quietly approaching. Whether it's instant delivery of cross-border remittances or low-cost payments on e-commerce platforms, this fintech revolution is moving from policy texts to real life. However, we need to keep in mind that in this emerging field, opportunities and risks coexist, and only by looking at them rationally can we grasp the real dividends.

The implementation of Hong Kong's new stablecoin policy has kicked off a new global digital finance competition. In this contest, whether it can balance innovation and risk, and balance international rules and Chinese characteristics will determine whether Hong Kong can truly become a “stablecoin hub” connecting East and West.