Author: He Liuying, Interface News
Stablecoins are sparking another market wave.
Recently, reports suggest that Ant International is planning to apply for stablecoin licenses in Hong Kong and Singapore. On June 12, Ant International responded that they are accelerating investment and expanding cooperation in global treasury management, and will invest their AI, blockchain, and stablecoin innovations into real and reliable large-scale applications.
"We welcome the Hong Kong Legislative Council's passage of the the 'Stablecoin Ordinance Draft', which will take effect on August 1st. We hope to submit our application as soon as the relevant channels open and contribute more to building Hong Kong's future international financial center," Ant International stated.
According to reports, Ant Group Vice President and Ant Digital Blockchain Business President Bian Zhuoqun revealed in an interview that Ant Digital has already initiated the application for a Hong Kong stablecoin license and has conducted multiple rounds of communication with regulators.
On June 12, Ant Financial concept stocks in the Hong Kong stock market collectively surged, with Cloud Peak Finance rising sharply, up 54.24% in a single day.
What are a stableoin? How large is the liquidity space for Hong Kong dollar stablecoins? Why are financial institutions and tech companies entering the market? What are the industry pain points?
<:1 Backing
For a long time, the significant price volatility of virtual assets has been criticized by the market. Stablecoins, due to being anchored to specific assets have relatively stable prices and are easier to accumulate value trust.
According to the 'Stablecoin Ordinance' published in the Hong Kong Special Administrative Region Government Gazette on May 30, stablecoins must meet the of maintaining stable value by referencing "a single asset;; a group or basket of assets"of".
Kong specifically defined the concept of "ststablecoins", referring to those maintaining stable value by referencing one or more official currencies one or more calculation units specified by the Hong Kong Monetary Authority (hereinafter referred to as "Kor more forms of economic value storage specified by the; a combination of.most familiar stablecoin is Tether (USDT), which is petogged dollar. Tether states that all Tethers are pegged 1:1 to their corresponding legal currency (e.),.1 T = 1 USD) and 100% backed by Tether's reserves.To ensure the true stability of stablecoins, the United States, United Kingdom, European Union, Hong Kong, China, Singapore and others have set strict requirements for stablecoin reserve assets.
The Hong Kong Ordinance clearly stipulates that the market value of the reserve asset portfolio must at all times be at least equal to the face value of unredemed and circulating specified st, and the licensee's reserve assets must be high-quality, highly liquid, and have the lowest investment risk.
The U.S. 'Genius Act' being promoted requires that to issue payment stablecoins, they must be backed by reserve assets at a ratio of at least 1:1 to the iss's stableco,ins including US dollar cash, US Treasury bonds maturing within 93 days.
According to the 2020 Digital Financial Strategy, the EU introduced the 'Crypto Assets Market Regulation' (MiCA), with rules for asset reference tokens and electronic money tokens (both stablecoins) taking effect from June 30, 2024.
The Monetary Authority of Singapore issued stablecoin regulatory regulations on August 15, 2023. The new regulatory framework applies to any stablecoin issued in Singapore and pegged to the Singapore dollar or or G10 currency, with reserve reserve assets including cash equivaland bonds maturing within three months.
On May 28, 2025, the UK Financial Conduct Authority (FCA) issued a consultation document suggesting that issuers must ensure that circcirculating stablecoins are 1:1 supported by a low-risk, liquid asset pool.
HashKey Group Chief Analyst Jeffrey Ding told Interface News that the of 1 pegging is essentially to that users' stholdings have real assets as support, avoiding "hollow financial" or bank run risks.
"1:that unit of stablecoin corresponds to an equivalent unit of real-world assets, enabling investors and usersto to have confidence in holding, using, or even making large transactions, avoiding trust crises. If reserves are not fully covered, 'face value redemption' promise will fail, which is detrimental to financial institutions or users quickly exchanging for legal tender, affecting circulation and settlement functions," Jeffrey Ding emphasized.
Some market views suggest that the US pegging stablecoins to US Treasury bonds aims to construct a "Bret".
Deng Jianpeng, professor at the Law School of Central University of Finance and Economics and director of the Financial Technology Law Research Center told Interface News "News that ""For the United States, since currently 90% of ststablecoins are pegged to the US dollar, its regulatory legislation has its own interest considerations. For example, the reserve fund requirements of US dollars cash,, which means stablecoin issuers will buy large amounts of US bonds, becoming major buyers of US bonds."
A Standard Chartered report believes that US legislation on stablecoins coins is issued soon, and the 'Genius Act' is likely to pass this summer. This will help increase the total supply of stablecoins from the current $230 billion to $20 trillion by the end of 2028,, withablecoins requiring reserves, and the expected supply growth will bring new demand for $1.6 trillion in ion in US short-term Treasury bonds.
Seeking Application Scenarios
For Hongg Kong aspstriving to become an international virtual asset center, entering the stablecoin market is expected.
"Hong Kong aims to become an international financial center, including being a WEB3 innovation center.. Issuing a Hong Kong dollar stablecoin or a stoin other legal tenders in Hong Kong will have significant importance for enhancing Hong Kong's international financial status,"EngEng Jianpeng stated.
However, due to obvious market share disadvantage, the development prospects of Hong Kong dollar stablecoins remain to be seen. "Currently, the stablecoin market is still oligopolistic, with US dollar-pegged stablecoins dominating, and Tether's stablecoins occupying most of that. For a non-US dollar stablecoin, besides regulatory approval, the most important factor is finding application scenarios to expand its actual role and market share," Jeffrey Ding said.
"The Hong Kong dollar stablecoin is anchored to the Hong Kong dollar, which has a relatively small market value. From far, scenario perspective, current stcurrentablecoins are currently mainly used cryptocurrency investment and trading. Although Hong Kong has regulated cryptocurrency exchanges and virtual asset ETFs, the overall trading volume is still small. Therefore, in the short term term, the Hong Kong dollar stablecoin may maintain a certain scale, but this scale won't be too large,"," Deng Jianpeng believes.
"Of course, application scenarios can break through from virtual currency trading to cross-payments,, because Hong Kong itself is an important financial center and trade services pivot, with significant demand in cross-border payments," Services Deng Jianpeng added.
OSL's Chief Business Officer Eugene Zhang recently stated in a media interview, "OSL supports enterprises in cross-border payments through stablecoins, with advantages in shortening payment time. If transferring money from South America to Hong Kong today through a bank, it would take at least 3-5 working days due to multiple intermediary banks, whereas stablecoins can achieve T+0 settlement. In terms of cost, stablecoin cross-border remittance is also lower than traditional financial institutions."
For stablecoins issued in Hong Kong, choosing cross-border scenarios is necessary.
"I believe stablecoins must be cross-border and cannot be limited to Hong Kong, otherwise their value would be limited," Zhang emphasized.
Of course, bridging on-chain and off-chain cross-border transactions is a long-term project. "This involves not only regulatory approvals from different countries and regions but also future financial infrastructure. As a cryptocurrency trading platform, we will also strive to facilitate communication between all parties," Zhang stressed.
Many Competitors
The stablecoin landscape is approaching, and related institutions are accelerating their actions.
In February this year, Standard Chartered Hong Kong, ANZ Group, and Hong Kong Telecom reached an agreement to establish a joint venture, hoping to apply for a license from the Hong Kong Monetary Authority under the new regulatory framework to issue a stablecoin pegged to the Hong Kong dollar.
"We are intensifying our preparatory work and will announce more details at the appropriate time," Dominic Maffei, Standard Chartered Hong Kong's Head of Digital Assets and Financial Technology, recently stated.
Notably, stablecoins have already generated a new financial increment space. On June 5, digital currency giant Circle listed on the New York Stock Exchange, becoming the "first stablecoin stock" with an opening price of $69 per share. As of the stock market closing on June 12, Circle's stock price had risen to $106.54 per share, with a total market value of $23.7 billion.
"I believe the development prospects of stablecoins are very promising. Besides Circle, which just went public in the US, and stablecoin giant Tether, I believe companies from China, Europe, South America, and other regions will also enter the market, with very bright prospects," said Deng Jianpeng.
Large companies are reacting quickly, such as Ant International and Ant Digital Technology, which have already made moves in stablecoin licensing.
"In fact, Ant Digital Technology participated in the Hong Kong Monetary Authority's Ensemble regulatory sandbox last August, mainly promoting RWA (Real World Asset tokenization) projects for entities like new energy charging piles. As Alipay's parent company, Ant Group's application for a Hong Kong stablecoin license aims to strengthen its blockchain technology layout and further serve its cross-border payment and fund management business," said Jeffrey Ding.
From a global competition perspective, "Ant International positions itself as benchmarking against international payment giants like Stripe, PayPal, Visa, and Mastercard, all of which have been involved in stablecoin issuance. As one of the first companies to publicly announce plans to apply for a Hong Kong stablecoin issuance license, Ant International has significant first-mover advantages with its strong fund management capabilities and global fintech background," Jeffrey Ding stated.
For comparison, in August 2023, global payment giant PayPal announced the launch of PayPal USD (PYUSD), a stablecoin pegged to the US dollar, 100% backed by US dollar deposits, short-term US Treasury bonds, and similar cash equivalents, issued by US fintech company Paxos Trust Company.
According to PayPal, customers can convert PYUSD between PayPal and compatible external wallets; send peer-to-peer payments using PYUSD; choose PYUSD for payment at checkout; and exchange any PayPal-supported cryptocurrency with PYUSD.
In fact, while competing for first-mover advantages, there are also asset allocation considerations. "After participating in stablecoin issuance, institutions can obtain legal currency payments from stablecoin holders at near-zero cost. Institutions can simultaneously use this to purchase low-risk investment products like US Treasury bonds, which will generate returns. Especially as the issuance volume and base of stablecoins increase, investment returns could be very significant," Deng Jianpeng said.
Many Pain Points Remain
"Currently, there are few legal and regulatory rules for stablecoins, and popular stablecoins actually have compliance and financial risks," Deng Jianpeng emphasized.
This includes asset stability issues. As mentioned earlier, stablecoins will need 100% pegged reserve assets, but to what extent can asset safety be guaranteed?
Jeffrey Ding believes that 1:1 real-world asset pegging enhances asset safety but cannot completely eliminate risks. High-safety assets (like short-term US bonds, cash, bank deposits) can be quickly liquidated, significantly reducing liquidity risks. However, if reserves consist of volatile or low-liquidity assets (like commercial papers or tokenized securities), risks will significantly increase. This is why Hong Kong and the US mandate that reserve assets must be high-liquidity assets, including cash and short-term US Treasury bonds.
Jeffrey Ding mentioned that both Hong Kong and the US require reserve assets to be held by independent, regulated custodians, completely isolated from the issuer's own funds. This prevents user asset losses due to issuer bankruptcy or fund misappropriation. Third-party accounting audits or on-chain verifiable mechanisms can enhance transparency and public confidence, preventing false endorsements or information asymmetry.
One risk is that if the pegged reserve assets have problems, the stablecoin will also have issues. In March 2023, Silicon Valley Bank collapsed due to a liquidity crisis, and Circle had $3.3 billion of its $40 billion USDC reserves in Silicon Valley Bank. This caused USDC's price to plummet to around $0.87, severely deviating from its anchored price.
At the application level, compliance issues are even more prominent. "In cross-border payments, stablecoins have clear advantages in both payment costs and efficiency compared to traditional financial institutions. However, the challenge lies in compliance - the issued stablecoin and its corresponding reserve cash or equivalent must be strictly pegged. If not, it's equivalent to over-issuing currency or fraud, which could be a major challenge for future regulation," Deng Jianpeng said.
"Another challenge is anti-money laundering. Stablecoins might be exploited by hackers or used for other illegal purposes, which is also a significant challenge," Deng Jianpeng stated.
It's worth noting that an industry consensus is that high compliance costs are a major problem that virtual asset participants must overcome.
"Lastly, for countries using non-US or non-mainstream legal currencies, or countries where their national currency credit has collapsed or experiencing severe inflation, the easy accessibility of stablecoins - requiring only internet access without bank account opening - might lead these countries to sell their national currencies and switch to US dollar stablecoins. This would pose significant challenges to these countries' financial sovereignty, monetary sovereignty, and financial security," Deng Jianpeng emphasized.
