Hong Kong rushes into digital assets: stablecoins, RWAs, and digital RMB

Abstract

Hong Kong is simultaneously promoting various digital currency experiments, including stablecoins, digital RMB, and RWAs. With a century of financial tradition, Hong Kong stands at a strategic juncture in ushering in the future of the digital world.

On the streets of Hong Kong, the "Octopus" and "token" logos are often seen together on both sides of the road. This vividly depicts the landscape of Hong Kong's financial industry: on one side, the century-long heritage of traditional finance, and on the other, the future of the digital world.

Today, the integration of traditional finance and the digital world is accelerating. As a bridge connecting the offline and online worlds, stablecoins are held in high regard by the market. Following the entry into force of the Stablecoin Ordinance, the Hong Kong Monetary Authority (HKMA) announced that applications for the first batch of stablecoin issuer licenses will be open from August 1 to September 30, 2025. Currently, many companies are eager to apply. A spokesperson for the HKMA revealed that as of August 31, 77 applications had been received, including from banks, technology companies, securities/asset management/investment firms, e-commerce companies, payment institutions, startups, and Web3 companies. However, despite the market's growing enthusiasm, Hong Kong regulators have frequently tempered their stance on stablecoins. On August 14, the Securities and Futures Commission (SFC) and the HKMA issued a statement emphasizing the need for investors to remain vigilant. The Hong Kong Monetary Authority has even stated that only a few stablecoin issuer licenses will be granted initially. Market participants believe this may be a true reflection of Hong Kong's rush into the digital asset market. On the one hand, the rapid advancement of stablecoin legislation demonstrates a determination to not lag behind, and even to take the lead. However, on the other hand, tightening regulations to ensure security may increase the cost of innovation for early adopters. In an interview with Caijing, Hong Kong Special Administrative Region Legislative Council member Darwin Chiu stated that while Hong Kong's tightening regulation of stablecoins is tightening, it may actually promote the industry's development. This is because it will protect the rights of market participants, attract more participants, and expand the market size. In addition to stablecoins, Hong Kong is also conducting various digital currency experiments. The other two projects are a digital currency bridge project jointly led by the Hong Kong Monetary Authority and other central banks, and tokenized deposits issued by banks. Many market participants believe this reflects Hong Kong's diverse digital experimentation, but this may also create a competitive landscape. The commercial applications of central bank digital currency projects and stablecoins are primarily cross-border payments. In the future, both parties will need to collaborate in large- and medium-value clearing and settlement, as well as retail payments, to form a more efficient cross-border payment system. Beyond cross-border payments, the market has even greater potential for exploring the potential of stablecoins. By combining the stability of fiat currency with the efficiency of blockchain, stablecoins may contribute to the tokenization of real-world assets (RWAs). This involves putting real-world currency ("money") on a blockchain, enabling investment in virtual assets. This holds significant significance for Hong Kong. Li Ming, Associate Research Fellow in AIoT at the Hong Kong Polytechnic University, Chair of the IEEE Computer Society's Blockchain and Distributed Ledger Standardization Committee, and Executive President of the Hong Kong Web 3.0 Standardization Association, told Caixin that Hong Kong's development of the RWA industry could drive mainland Chinese assets overseas and attract foreign capital. In the digital world, Hong Kong can still play the role of a "super connector." Meanwhile, as the world's largest offshore RMB hub, Hong Kong can also revitalize itself in the digital world. If Hong Kong's stablecoin is anchored to the offshore RMB in the future, the growing market size of the stablecoin will promote the internationalization of the RMB. Xiao Feng, Chairman and CEO of Hong Kong's HashKey Group, told Caixin that promoting the internationalization of the RMB, whether in traditional finance or the digital world, hinges on expanding offshore RMB assets and developing supporting innovative products to attract a wider range of overseas investors. From the perspective of the global monetary system, Li Ming believes that Hong Kong's stablecoin experiments are more focused on application scenarios and innovation in the digital financial sector. In contrast, the US government's dollar-denominated stablecoin is pegged to the US dollar and US Treasury bonds, hoping to further strengthen the dollar's influence in the digital world. "If Hong Kong's stablecoin is to be widely accepted globally, it requires standardization in technical systems, application scenarios, and industrial ecosystems, as well as further design in financial systems and monetary policy," he said.

（Hong Kong is trying a variety of digital currency payment methods, photo by