The recent passage of Hong Kong's Stablecoin Ordinance Bill marks a significant milestone in the regulation of digital assets. This legislative move has not only advanced the territory's regulatory framework but also triggered substantial market movements, particularly for companies positioned to benefit from the new legal environment.
Stablecoins, a type of cryptocurrency designed to maintain a stable value by pegging to a reserve asset, are increasingly influential in global finance. Their integration into traditional financial systems promises enhanced liquidity, faster settlements, and broader access to digital asset services.
How Stablecoin Policies Benefit Financial Institutions
The enactment of the Stablecoin Ordinance Bill establishes a licensing regime for issuers of fiat-referenced stablecoins in Hong Kong. This regulatory clarity has had immediate ripple effects across financial markets, boosting stocks of companies associated with virtual asset services.
Case Study: ZhongAn Insurance and ZA Bank
ZhongAn Insurance, holding a 43.43% stake in ZA Bank, saw its stock surge nearly 60% from May to its peak in June. ZA Bank has positioned itself as a pioneer in digital banking for the Web3 era, becoming the first Hong Kong-based digital bank to offer reserve banking services to stablecoin issuers. Its collaboration with regulatory sandbox participants and partnerships with over 80 Web3 companies underline its strategic focus on digital asset infrastructure.
Analysts from firms like DBS Bank have noted that the market previously undervalued ZA Bank’s potential, with its valuation now estimated at $2 billion. This revaluation reflects growing investor confidence in stablecoin-related ventures.
Securities Firms and Virtual Asset Licensing
Similarly, Guotai Junan International experienced a dramatic stock price increase of 198% in a single day after upgrading its securities license to include virtual asset trading and advisory services. This upgrade allows clients to trade major cryptocurrencies and stablecoins directly on its platform.
The move is part of a broader trend: 40 securities firms in Hong Kong now hold upgraded licenses for virtual asset services, signaling a rapid institutional adoption of digital asset capabilities.
The Role of Stablecoins in Enhancing Real-World Asset Liquidity
Stablecoins serve as a bridge between traditional finance and digital ecosystems. By tokenizing real-world assets (RWA)—such as commodities, securities, or bonds—they enable fractional ownership, increased transparency, and faster transactions.
Market Growth and Applications
The global stablecoin market has expanded remarkably, with its total market capitalization exceeding $240 billion as of mid-2025—a 170-fold increase since 2017. According to Boston Consulting Group, the RWA market could reach $16 trillion by 2030, with stablecoins capturing 30–50% of this value.
Stablecoins also outperform traditional payment networks in transaction value. In 2024, their settlement volume reached $15.6 trillion, surpassing both Visa and Mastercard. However, stablecoin transactions are fewer in number but higher in value, indicating their current dominance in B2B and large-scale settlements.
👉 Explore advanced asset tokenization strategies
Hong Kong as a Testing Ground for RMB-Backed Stablecoins
Hong Kong’s unique position as a global financial hub with strong ties to mainland China makes it an ideal testing ground for financial innovations—especially those involving currency internationalization.
Regulatory Innovations and Future Scenarios
The Stablecoin Ordinance introduces the concept of “designated stablecoins,” which are pegged to official currencies or other approved value reserves. Issuers must comply with strict licensing, reserve management, and redemption rules administered by the Hong Kong Monetary Authority (HKMA).
Experts like Xiao Feng, CEO of HashKey Group, suggest that Hong Kong could serve as a launchpad for offshore RMB-backed stablecoins. Such initiatives would support the internationalization of the Chinese yuan and create synergies with central bank digital currencies (CBDCs).
Potential Challenges to Traditional Finance
While stablecoins offer numerous benefits, they also pose challenges to existing financial structures.
Deposit Migration and Monetary Policy
Widespread stablecoin adoption could lead to “deposit migration,” where consumers move funds from traditional bank deposits into digital assets. This shift may reduce banks’ capacity for lending and complicate monetary policy implementation.
For example, stablecoins functioning as digital cash could blur the lines in money supply metrics (such as M0 and M1), making it harder for central banks to manage economic stability.
Credit and Financial Stability
Stablecoins might also inhibit credit expansion by reducing the deposits that underpin bank lending. In doing so, they could unintentionally tighten monetary conditions, similar to a reserve requirement hike.
Frequently Asked Questions
What is a stablecoin?
A stablecoin is a type of cryptocurrency whose value is pegged to a stable asset like a fiat currency, commodity, or financial instrument. This design reduces volatility and makes it suitable for payments and settlements.
How do stablecoins improve liquidity?
By tokenizing real-world assets, stablecoins enable fractional ownership and faster cross-border transactions. This enhances market liquidity and accessibility for investors.
Why is Hong Kong leading in stablecoin regulation?
Hong Kong boasts a robust financial regulatory system and deep integration with global markets. Its proactive approach aims to solidify its status as a fintech hub while exploring synergies with mainland China.
Can stablecoins replace traditional banking?
Not in the near term. While they offer efficient alternatives for payments and asset tokenization, they lack the full range of services—such as credit creation and financial advice—that banks provide.
What are the risks of using stablecoins?
Key risks include regulatory changes, reserve mismanagement by issuers, and potential impacts on monetary stability. Users should prefer licensed and fully reserved stablecoins.
How do stablecoins support RMB internationalization?
Offshore RMB-backed stablecoins could facilitate cross-border trade and investment in yuan, reducing dependency on the USD and strengthening China’s currency in global markets.
Stablecoins represent more than a technological innovation—they are reshaping financial landscapes, offering new tools for liquidity and investment while challenging traditional frameworks. As regulatory systems evolve, these digital assets will likely play an increasingly central role in both developed and emerging markets.