Stablecoins are drawing closer to mainstream adoption. Recent comments by People's Bank of China Governor Pan Gongsheng have pushed market discussions about stablecoins to a new peak. At the Lujiazui Forum on June 17, Pan Gongsheng publicly mentioned stablecoins for the first time, pointing out that emerging technologies like blockchain and distributed ledger technology are driving the vigorous development of central bank digital currencies and stablecoins, while also posing significant challenges to financial regulation.
Over the past six years, the global stablecoin market has grown 45-fold in size, with its value extending from its initial role as a stable anchor for cryptocurrencies into the realm of cross-border payments. To seize this opportunity, both the U.S. "Clarity Act" and Hong Kong’s "Stablecoin Ordinance" have made clear provisions regarding issuer qualifications, regulatory frameworks, reserve management, and compliance audits for stablecoins.
Various market players are tirelessly competing for issuer qualifications. For instance, Jian Da Company and SoftBank Group are still seeking equity in Tether, while the Trump family remains deeply involved in the issuance of USD1. A similar scenario is unfolding in Hong Kong.
The Four Contenders in Hong Kong’s Stablecoin Arena
Although Hong Kong stablecoins have not yet been officially issued, forces including tech newcomers, cryptocurrency capital, and traditional finance are already engaged in competition and cooperation for issuer qualifications. Based on public information and issuer requirements, four major factions are currently vying for dominance in Hong Kong’s stablecoin market.
The first and most well-known group comprises mainland internet capital, including JD.com (9618.HK), which was included in the first batch of sandbox testing, and Ant Group, which has clearly stated its intention to apply.
The third contender is Rupee Innovation, also included in the first sandbox test, along with its backing from internet finance and "crypto circle" forces.
The fourth faction comes from Hong Kong’s traditional old-money forces, consisting of a coalition between Standard Chartered Hong Kong, Web3 enterprise Animoca Brands, and PCCW Limited (6823.HK) under the leadership of Richard Li, the "little superman."
In July 2024, JD Coin Chain, Rupee Innovation, and the alliance of Standard Chartered Hong Kong, Animoca Brands, and PCCW were approved to enter the Hong Kong Monetary Authority’s first batch of stablecoin issuer sandbox tests. Ant Group’s Ant Digital Technologies and Ant International have recently stated they will apply for stablecoin issuance in Hong Kong.
The HKMA previously stated that the sandbox test aims to ensure that institutions issuing stablecoins in Hong Kong can test operational plans and engage in two-way communication with regulators, but this is not a prerequisite for applying for a stablecoin issuer license. This means that these four forces still stand on the same starting line today.
JD.com's Cross-Border Payment Strategy
The first active player is JD.com, which regards international expansion as "an important part of its growth strategy." In March 2024, the HKMA launched a sandbox for stablecoin issuers to communicate expectations to institutions interested in issuing stablecoins in Hong Kong. JD Coin Chain, wholly owned by a JD Technology subsidiary, was established in Hong Kong that same month.
Four months later, the HKMA announced the three groups selected for the first sandbox test, with JD Coin Chain included as an independent entity. The significance of being selected in the first round indicates that JD.com has been planning its stablecoin business for some time. The HKMA received inquiries from dozens of institutions but only chose three issuers for testing.
According to the arrangements, sandbox participants must explain their business networks, supply chains, or major partners and demonstrate the issuance, distribution, and redemption processes through the sandbox. JD Coin Chain stood out because it had already formed a complete concept for subsequent issuance matters during the application phase.
Building a stablecoin ecosystem requires not only an issuer but also financial institutions to custody reserve funds, involving multiple entities such as blockchains, exchanges, and payment institutions for practical use. Several partners of JD Coin Chain have already emerged.
In terms of reserve custody, Hong Kong virtual bank Airstar Bank announced that it is cooperating with JD Coin Chain to build a transparent and secure custody system for reserve assets. This bank is backed by Xiaomi (holding 50.3%, 1810.HK), which has long been interested in financial markets, and Tencent-affiliated Futu Holdings (holding 44.1%, 3588.HK).
Additionally, JD Technology once held a 23.74% stake in Hong Kong virtual bank Livi Bank through a wholly-owned subsidiary. Although there is no public cooperation between Livi Bank and JD Coin Chain, the potential for collaboration exists as both are under JD Technology.
JD Coin Chain revealed that the company has cooperated with leading compliant exchanges for investment transactions and connected with acquiring scenarios like JD Hong Kong and Macau stations for retail payment testing. According to the plan, JD.com’s future cross-border payment costs may be reduced by 90%, with payment efficiency increased to within 10 seconds.
Reducing the friction cost of cross-border payments may be JD.com’s original intention for developing stablecoins. Liu Peng, CEO of JD Coin Chain Technology, stated that the company’s stablecoin business was born out of the group’s overseas development needs.
After listing on Nasdaq in 2014, JD.com clearly identified internationalization as one of its core strategies. By building its own logistics network and brand direct sales, it replicated its core competitiveness of "genuine products + logistics" in overseas markets. By the end of 2024, JD Logistics had over 100 bonded, direct mail, and overseas warehouses covering 19 countries and regions.
Liu pointed out that the zero-to-one "cold start" scenario provided by JD.com’s e-commerce ecosystem is one of JD Coin Chain’s first-mover advantages. According to his analysis, if stablecoins are issued, a vast number of merchants on the JD platform will use stablecoins to improve efficiency in upstream and downstream settlements and manage funds more flexibly overseas.
"Our goal is not to compete in crypto-native or investment trading scenarios, but to open up new battlefields and connect traditional cross-border trade settlement markets," Liu said. As of early June, JD Coin Chain had conducted tests for Hong Kong dollar stablecoins and is planning tests for other fiat currencies. It expects to issue two stablecoins simultaneously in the future.
Hong Kong may only be the starting point for JD.com’s stablecoin issuance. Liu Qiangdong recently stated that JD.com is preparing to apply for stablecoin licenses in major currency countries worldwide, hoping to use these licenses to achieve exchange services between global enterprises and significantly reduce cross-border payment costs.
Liu pointed out that after successfully building a B-end payment system, JD.com also plans to penetrate the C-end, enabling global consumers to use JD stablecoins for consumption payments in the future.
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The Ant Group’s Strategic Moves
Compared to the institutions included in the first sandbox list, the two companies under the Ant Group seem to have arrived late. In 2024, Ant Group upgraded its organizational structure, with Ant International, OceanBase, and Ant Digital Technologies each establishing boards of directors to face the market independently.
After the passage of the Stablecoin Ordinance, both Ant International and Ant Digital Technologies publicly stated that they would apply for stablecoin licenses in Hong Kong. Ant International stated that it would submit its application as soon as possible after the bill takes effect (August 1), while Ant Digital Technologies has already initiated its application and has held multiple rounds of communication with regulators.
Ant International leans towards cross-border payment scenarios, where stablecoins act more like infrastructure in fund flows. Currently, Ant International has four major business lines: the global integrated wallet portal service (Alipay+), merchant payment services (Antom), corporate account services (WorldFirst), and scenario financial services (Bettr).
The use of stablecoins would significantly reduce cross-border payment costs, improve settlement efficiency, and reduce exchange rate fluctuation risks. Corresponding to business needs, Ant International’ future reserve custodian may be Deutsche Bank (DBK.DF).
Deutsche Bank has announced a strategic cooperation with Ant International, stating that the two companies will further research global payments with stablecoins, including real-time cross-border fund management, reserve management, and upstream and downstream services for Ant entities. The reserve management likely refers to depositing and custoding 1:1 currency reserves when issuing stablecoins.
Ant Digital Technologies’ stablecoin business may focus more on industrial applications of underlying blockchain technology. For example, as an important medium in RWA (real-world asset tokenization) transactions, stablecoins may form an ecosystem with Ant Digital Technologies’ RWA business.
RWA refers to the digitization of physical or financial assets in the traditional real world through blockchain technology, making them digital assets that can be traded and circulated on the chain. In August 2024, Ant Digital Technologies cooperated with Langxin Group (300682.SZ) to complete China’s first RWA financing based on new energy assets, using some charging piles and energy storage equipment under Langxin Group as RWA anchor assets for financing of approximately 100 million yuan.
This innovative transaction was selected as one of the first real-world asset tokenization cases in the HKMA’s Project Ensemble sandbox. Subsequently, Ant Digital Technologies completed new energy RWA issuances with GCL Energy Technology (002015.SZ) and Xunying Group.
Bian Zhuoqun, president of Ant Digital Technologies’ blockchain business, stated that stablecoins, as a bridge connecting traditional finance and tokenized assets, have broad market potential, with their core value lying in the expansion of usage scenarios and compliance building.
Bian stated that Ant Digital Technologies is committed to building digital trading scenarios based on stablecoins and promoting the development of new asset categories with technology at the core. "We provide safe, reliable, and compliant infrastructure to offer new incremental markets for stablecoin transactions, improving transaction efficiency and liquidity," Bian said.
Currently, Ant Digital Technologies has not disclosed its reserve custodian, but Ant Group still has a wholly-owned virtual bank in Hong Kong. Industry insiders point out that the two Ant Group companies applying separately both分散监管风险 (disperse regulatory risks) and can expand technological synergy. The combination of merchant networks and on-chain asset capabilities can cover the entire chain from payment to asset circulation.
Since there have been rumors that Ant International, OceanBase, and Ant Digital Technologies have plans for independent listings, the market speculates that Ant’s separation of its stablecoin business may be to increase valuation chips for a future IPO on the Hong Kong Stock Exchange.
Rupee Innovation’s Star-Studded Backing
Compared to the two giants, the capital behind Rupee Innovation is closer to the "crypto circle" and internet finance newcomers. Rupee Innovation’s parent company, Rupee Technology, was established in 2020 and founded by Norman Chan, former president of the HKMA.
Initially, Rupee Technology attracted five major investors with a relatively equal equity structure: ZhongAn Digital Asset Group Limited, Bright Venture Investment L.P., Dragonfly Round L.P., HashKey Holdings Limited, and Eminent Vision Limited. Among them are many names familiar to the "crypto circle."
For example, Dragonfly, as a top global venture capital firm in cryptocurrency and Web3, has successfully invested in star projects like Avalanche (public chain) and Near Protocol (Layer 1). Its first fund for Rupee Technology even attracted forces such as Neil Shen, CEO of Sequoia China; Xu Yong, co-founder of Baidu (9888.HK); Zhang Tao, founder of Dianping; and Cai Wensheng, chairman of Meitu (1357.HK).
Xiao Feng, chairman and CEO of HashKey, formerly served as vice chairman of Wanxiang Holdings. HashKey Exchange under his leadership is currently Hong Kong’s largest licensed virtual asset exchange. ZhongAn Online (6060.HK), behind ZhongAn Digital Asset, has also been布局虚拟资产领域 (deploying in the virtual asset field) for many years. Through its subsidiary ZhongAn International, it holds a 43.43% stake in ZhongAn Digital Asset and ZhongAn Bank.
As early as 2021, ZhongAn International signed an agreement with BC Technology (0863.HK) for BC Technology’s OSL exchange to support its digital asset transactions. In 2023, ZhongAn Bank began providing Hong Kong dollar fiat deposit services for HashKey Exchange.
Compared to internet giants focusing on specific areas like cross-border payments and RWA from their own business perspectives, Rupee Technology, backed by a group of professional capital,更像是 (is more like) a comprehensive "crypto circle" professional player.
Rita Liu, president of Rupee Technology, stated that the company’s Hong Kong dollar stablecoin has three major scenarios: first, currency trading itself, as compliant stablecoins have a large market in compliant exchanges; second, cross-border payments and trade, based on the potential of stablecoins themselves in cross-border payments and清算 (clearing); third, tokenized asset intermediation, as there are many discussions and attempts globally and in Hong Kong regarding the tokenization of traditional assets.
Initially, Rupee Technology’s fiat custody was handled by OKG Technology (1499.HK), specifically executed by its trust. Now, ZhongAn Bank has announced that it will become the asset custodian for Rupee Technology’s future stablecoins.
Referring to the currently largest offshore non-compliant stablecoin USDT and onshore compliant stablecoin USDC, both profits come from handling fees and reserve收益 (income); the former depends on the number of stablecoin users, and the latter depends on the current interest rate level. From this perspective, the potential energy that Rupee Technology can leverage in the future is enormous.
On the one hand, Rupee Technology is currently the only one among the four forces that deeply cooperates with exchanges; and the energy after binding stablecoins with exchanges has been verified in the international market.
For example, when Coinbase (COIN.O) was still the major shareholder of USDC issuer Centre (now Circle, CRCL.N), it introduced support such as减免 (waiving) handling fees for non-US dollar users of USDC, which promoted the continuous rise of the stablecoin’s scale, once approaching the industry’s largest USDT.
Currently, Rupee Technology shareholder HashKey operates Hong Kong’s largest licensed virtual asset exchange. Rita Liu stated that after testing matures and regulatory approval is obtained, plans are to list HKDR on HashKey Exchange.
On the other hand, the payment party bound to Rupee Technology, LianLian Digital (2598.HK), is equally strong. LianLian Digital, which IPOed in 2024, is the first company on the Hong Kong Stock Exchange focused on cross-border payment business. Currently, its subsidiary DFX Labs has obtained a Hong Kong VATP (virtual asset trading) license, and another subsidiary, LianLian International, has reached a cooperation with Rupee Technology on stablecoin cross-border payment scenarios.
Liu Yu once said, "There is a consensus among some stablecoin issuers in the industry that the market is likely to reach three trillion US dollars within five years. Stablecoins bring more traditional financial markets into Web3. If Rupee Technology can act as a good bridge, it will expand a huge market."
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The Mysterious Old-Money Alliance
The last force, in terms of identity, seems more like an attempt by Hong Kong’s old-money capital under the new格局 (structure). This is the third issuer disclosed by the HKMA, composed of Standard Chartered Hong Kong, Animoca Brands, and PCCW. Although the joint entry of these three lacks the sharpness of tech newcomers and "crypto circle" players, it still demonstrates deep底蕴 (heritage).
The predecessor of Standard Chartered Hong Kong was one of the first Hong Kong dollar note-issuing banks, the Chartered Bank of India, Australia and China. Standard Chartered Hong Kong was independently registered in 2004 and remains one of Hong Kong’s three note-issuing banks, directly participating in the construction of the Hong Kong dollar monetary system.
Animoca Brands was established in 2014, initially engaged in mobile game development授权 (authorized) by anime IP. It listed on the Australian Stock Exchange in 2015. Inspired by the blockchain cat-raising game "Crypto Kitties," Animoca Brands transformed to invest in the Web3 ecological network. Later, in 2020, due to its involvement in NFT and blockchain game development, it was deemed by the Australian Stock Exchange to have compliance risks and was forced to delist.
Since then, Animoca Brands has completely剥离 (divested) traditional mobile games and focused on Web3 investment, attracting top institutions like Sequoia China, Temasek, and the Soros Fund, with its valuation soaring to $5 billion in 2021.
The last participant is PCCW under the leadership of Richard Li, the second son of李嘉诚 (Li Ka-shing). In 2000, Richard Li successfully acquired a 54.06% stake in Hong Kong Telecom for $13 billion plus部分股权 (partial equity) of Pacific Century Group, earning the title "little superman" through this battle.
Different business positioning also reveals trends in division of labor: in the future, Standard Chartered Hong Kong, as a traditional financial institution, may provide compliance endorsement and risk control systems; Animoca Brands can lead Web3 ecological scenario development; and PCCW can rely on its global communication network and payment scenarios to achieve the practical application of stablecoins.
However, at present, the progress of the stablecoin business for the above three remains quite mysterious. Inquiries reveal that Standard Chartered Hong Kong, Animoca Brands, and PCCW had no public cooperation in blockchain or virtual assets prior to this.
After being selected for the sandbox test, Standard Chartered Hong Kong has stated that it will establish a joint venture with Animoca Brands and PCCW. However, more key information about the joint venture, such as equity structure, registered capital, establishment progress, executive composition, and organizational structure, has not been released.
In terms of partners, although the Stablecoin Ordinance does not impose clear restrictions on stablecoin asset reserve institutions, considering the隔离伦理 (isolation ethics) between issuers and custodians, the joint venture may still need to find institutions other than Standard Chartered to provide custody cooperation.
In terms of payment channels, PCCW’s wholly-owned subsidiary HKT Payment Limited holds a Stored Value Facility (SVF) license, which may be the key to implementation. Judging solely from shareholder禀赋 (endowments), the newly established joint venture issuer may not be weaker than other institutions, but the key is whether the three companies can truly break through internal barriers and form smooth合力 (synergy) in the future.
For example, the advantage of traditional financial institutions lies in abundant resources and稳健 (steady) risk control, but the drawback is compliance review processes, slow节奏 (pace), and lack of execution and market acumen compared to tech companies and crypto-native companies.
The advantage of alliances between local forces lies in familiarity with the market and mutual empowerment, but attention must also be paid to the professionalism of the management team and the efficiency of decision-making processes.
Frequently Asked Questions
What is a stablecoin?
A stablecoin is a type of cryptocurrency designed to maintain a stable value relative to a specified asset, like the US dollar or gold. They achieve this stability through various mechanisms, including holding reserve assets or using algorithmic formulas.
Why is Hong Kong becoming a hub for stablecoin development?
Hong Kong has established a clear regulatory framework through its Stablecoin Ordinance, providing clarity for issuers. Its position as a global financial center and its embrace of fintech innovation make it an attractive jurisdiction for developing and testing stablecoins.
What are the main use cases for stablecoins being pursued in Hong Kong?
The primary use cases include reducing costs and improving efficiency in cross-border payments and trade settlements, acting as a medium of exchange within cryptocurrency exchanges, and serving as a bridge for trading tokenized real-world assets (RWA).
How does the HKMA's sandbox testing work for stablecoins?
The sandbox allows potential issuers to test their stablecoin issuance, distribution, and redemption processes in a controlled environment. It facilitates two-way communication with regulators to ensure plans meet regulatory expectations before formal license applications.
What is the difference between a compliant and non-compliant stablecoin?
Compliant stablecoins operate within a regulatory framework, which typically mandates requirements like full backing by reserve assets, regular audits, and consumer protection measures. Non-compliant stablecoins may not adhere to these standards, potentially posing higher risks to users.
When are the first licensed stablecoins in Hong Kong expected to launch?
Following the passage of the Stablecoin Ordinance, the application process is underway. The first licensed stablecoins could launch after the HKMA completes its review of applications and grants licenses, potentially in the coming months.
Today, Hong Kong stablecoins are still about a month away from official launch. Previously, some analysts predicted that the final number of issuers for Hong Kong stablecoins would be around 10. This means that in addition to the four forces that have already appeared, more capital is ready to make its move.