Cryptocurrency

Advocates name for Hong Kong govt stablecoin to compete with Tether and USD Coin

July 4, 2023
2 minutes read

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Crypto and blockchain advocates have authored a report calling for the Hong Kong authorities to concern a stablecoin pegged to the area’s greenback, which might problem the dominance of Tether and USD Coin.

Based on an English translation of a July 3 report provided by Chinese language crypto reporter Colin Wu, 4 people tied to monetary innovation proposed the federal government concern an HKDG (Hong Kong Greenback Authorities) stablecoin to assist its management efforts within the digital financial system. Wang Yang, vice chairman for institutional development at Hong Kong College of Science and Know-how; Cai Wensheng, founding father of smartphone software program agency Meitu; Lei Zhibin, an honorary chair of the Hong Kong Blockchain Affiliation; and doctoral pupil Wen Yizhou co-authored the paper.

“Issuing a stablecoin pegged to the Hong Kong greenback not solely helps to solidify Hong Kong’s management within the blockchain sector but in addition propels the progress of the digital Hong Kong greenback, enhancing transaction effectivity, decreasing transaction prices, bettering present cost programs, and additional strengthening Hong Kong’s fintech capabilities,” mentioned the report. “Furthermore, the Hong Kong Greenback stablecoin can improve the effectivity and inclusiveness of Hong Kong’s monetary system; its stability, freedom of trade, excessive safety, openness, and cross-border liquidity can assist a wider vary of monetary improvements.”

Yang, Wensheng, Zhibin, and Yizhou argued that the federal government’s plan of encouraging personal establishments to concern stablecoins pegged to the Hong Kong greenback was “too conservative” in distinction to its intention of selling crypto and blockchain. The report claimed that Hong Kong’s international trade reserves as of March 2023 totaled roughly $430 billion, “considerably surpassing” the mixed market capitalization of Tether (USDT) and USD Coin (USDC) at roughly $120 billion.

”HKDG backed by the SAR [special administrative region] authorities may have larger credibility and decrease danger, […] particularly because the credibility of USDT stays in query, and USDC has lately skilled extreme reductions.”

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Among the many advantages the report’s authors believed might come from the launch of HKDG included difficult the dominance of america greenback, offering further liquidity for presidency initiatives and making it simpler for officers to observe and assess dangers. Nonetheless, the report cited potential dangers, together with authorized and regulatory challenges, worldwide disputes over transactions probably tied to illicit funding and hacks.

“The dangers borne by the government-issued HKDG are considerably decrease than these of the Hong Kong Greenback stablecoin issued by personal establishments,” mentioned the report.

In June, the federal government of Hong Kong introduced it had shaped a activity drive to supervise the event of Web3. Greater than 80 corporations concerned in digital belongings or blockchain reportedly thought-about establishing a presence within the SAR as of March, along with the roughly 800 fintech firms already in Hong Kong.

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