“Issuing a stablecoin tied to the Hong Kong dollar not only helps to solidify Hong Kong’s leadership in the blockchain sector, but it also speeds up the progress of the digital Hong Kong dollar,” said the report.
In a report, cryptocurrency and blockchain advocate demand that Hong Kong establishes a stablecoin that is pegged to the local currency to compete with Tether and USD Coin.
Four financial innovators suggested the government establish an HKDG (Hong Kong Dollar Government) stablecoin to boost its digital economic leadership, according to a July 3 Chinese crypto reporter Colin Wu story. The article was co-authored by Hong Kong University of Science and Technology vice president for institutional advancement Wang Yang, Meitu founder Cai Wensheng, Hong Kong Blockchain Association honorary chair Lei Zhibin, and doctorate student Wen Yizhou.
According to the report, “Issuing a stablecoin pegged to the Hong Kong dollar not only helps to solidify Hong Kong’s leadership in the blockchain sector but also propels the progress of the digital Hong Kong dollar, enhancing transaction efficiency, reducing transaction costs, improving current payment systems, and further strengthening Hong Kong’s fintech capabilities.” The Hong Kong Dollar stablecoin’s stability, freedom of exchange, high security, openness, and cross-border liquidity can promote a wider range of financial innovations, boosting Hong Kong’s financial system’s efficiency and inclusivity.
Yang, Wensheng, Zhibin, and Yizhou said the government’s plan to encourage private institutions to issue stablecoins pegged to the Hong Kong dollar was “too conservative” for advancing crypto and blockchain. Hong Kong’s foreign exchange reserves as of March 2023 were $430 billion, “significantly surpassing” Tether and USD Coin’s combined market capitalization of $120 billion.
The report’s authors claimed HKDG might challenge the US dollar’s supremacy, provide liquidity for government projects, and make risk monitoring and assessment easier. However, legal and regulatory issues, international conflicts over transactions linked to illicit finance, and cyberattacks were listed as threats.
The analysis stated that the government-issued HKDG has lesser risks than the private-sector Hong Kong Dollar stablecoin.
The Hong Kong government established a Web3 task team in June. In March, more than 80 blockchain and digital asset firms contemplated moving to the SAR, joining Hong Kong’s 800 fintech enterprises.