Hong Kong's Legislative Council recently passed the Stablecoin Ordinance Bill, marking a significant step in digital asset regulation. This move has ignited a surge in related financial stocks, with companies like ZhongAn Insurance and Guotai Junan International experiencing dramatic share price increases.
Key Beneficiaries of Stablecoin Policies
The ordinance establishes a licensing framework for stablecoin issuers in Hong Kong, comprising 176 clauses across 11 sections. Market response was immediate:
- ZhongAn Insurance (06060.HK) saw shares rise nearly 60% since May, peaking at HK$22.75 on June 19. Its stake in digital bank ZA Bank (43.43%) positions it as a major player, now providing reserve banking services for stablecoin issuers.
- Guotai Junan International (01788.HK) surged 198% in one day after upgrading its securities license to include virtual asset trading services, including stablecoins like USDT.
👉 Discover how stablecoins are transforming finance
Why Stablecoins Matter
Stablecoins—cryptocurrencies pegged to stable assets like fiat currencies—offer unique advantages:
- Enhanced Liquidity: Tokenizing real-world assets (RWA) improves market accessibility and transparency.
- Payment Efficiency: With 2024 transaction volumes surpassing Visa ($15.6T vs. $13T), stablecoins excel in high-value B2B payments—though 70% of current activity involves crypto arbitrage.
- Market Growth: Global stablecoin市值 has grown 170x since 2017, reaching $240B (7% of total crypto market cap). Projections suggest RWA markets could hit $16T by 2030, with stablecoins capturing 30-50%.
Hong Kong's Strategic Role
The 2025 ordinance introduces "designated stablecoins"—assets pegged to official currencies or HKMA-approved value stores. Key provisions include:
- Mandatory licensing for issuers targeting Hong Kong markets
- Strict reserve management and redemption protocols
- Segregation of client assets
Experts like Ouyang Rihui (Central University of Finance) highlight Hong Kong's potential as a testing ground for offshore RMB stablecoins, leveraging its status as the largest offshore RMB hub. This could:
- Advance RMB internationalization
- Create synergy with digital yuan pilots
- Counterbalance USD stablecoin dominance
FAQ: Stablecoins Demystified
Q: How do stablecoins impact traditional banks?
A: They may cause "deposit migration," reducing banks' lending capacity and complicating monetary policy tools like reserve ratios.
Q: What's driving Hong Kong's stablecoin push?
A: Positioning as a Web3 hub while maintaining regulatory oversight—balancing innovation with financial stability.
Q: Are stablecoins mainly used for payments?
A: Currently, most transactions involve crypto trading. Payment adoption remains limited but growing.
👉 Explore the future of asset tokenization
Challenges Ahead
While promising, stablecoins pose systemic risks:
- Monetary Policy Disruption: Their M0-like properties distort money supply metrics.
- Credit Contraction: Reduced deposits may constrain bank lending.
- Regulatory Gaps: Cross-border flows complicate oversight.
As HashKey CEO Xiao Feng notes, proactive measures are crucial. Hong Kong's experiment could shape global standards while safeguarding financial stability.