jakiro
Author: Zhang Feng
A spokesperson for the Hong Kong Monetary Authority said that as of August 31, there were 77 cases expressing their intention to apply for stablecoin licenses to the HKMA, including banks, technology companies, securities/asset management/investment companies, e-commerce, payment institutions, start-ups/web3 companies, etc.
After the news came out, the market responded in a mixed manner.Some people believe that this reflects regulatory prudence, while others question whether this amount is enough to support Hong Kong’s ambitions as an international financial center.Judging from the application prospects of stablecoins, industry empowerment needs and Hong Kong’s international competitive positioning, 77 applications are not only a positive signal, but also reflect deeper challenges.
1. Regulatory Perspective: Encourage innovation and prudence
As a crypto asset anchored by fiat currency, the value of stablecoins is usually linked to fiat currency or a basket of assets, becoming a bridge connecting the traditional finance and the digital currency world.Of course, the risks of stablecoins cannot be ignored: including the opacity of reserve assets, the risk of runs, potential systemic financial risks, and the possible use of money laundering and illegal transactions.Because of this, the Hong Kong Monetary Authority has adopted a cautious regulatory attitude and screened qualified issuers through a strict access mechanism.
The number of 77 applications reflects to a certain extent the market’s confidence in the Hong Kong stablecoin regulatory framework.Compared to some jurisdictions that are completely prohibited or overly loose, Hong Kong is trying to find a balance between innovation and stability.This prudent regulatory principle helps prevent risks, protect investors’ interests, and lays the foundation for long-term stability of the financial system.
However, caution does not mean conservative.If the regulation is too strict, it may lead to insufficient motivation for innovation and even make Hong Kong miss its leading position in the field of digital finance.Therefore, behind the 77 applications, what is more important is how regulators choose among these applications that can meet risk control requirements and promote the development of the industry.
2. Industrial perspective: satisfying scenarios and moderate competition
From the perspective of stablecoin application, industrial empowerment requires more choices and richer application scenarios.Stablecoins are not only a payment tool, but also an important infrastructure for the future digital economy.It can be used in multiple fields such as cross-border trade settlement, supply chain finance, smart contracts, DeFi (decentralized finance), and injecting new vitality into the traditional financial system.
If only a few stablecoin issuers get approval, the market may face limited choices and insufficient competition.On the contrary, moderate competition can promote technological innovation, reduce transaction costs, and improve service quality.77 applications mean that the market is interested in the issuance of stablecoins, but if only a very small number of applications are approved in the end, it may suppress the diversity and innovation of the market.
In addition, different application scenarios may require different types of stablecoins.For example, some stablecoins may be more suitable for commodity trading, while others may focus more on retail payments or cross-border remittances.If there are only a few stablecoins in the market, their scope of application may be limited.Therefore, from the perspective of industry empowerment, not only are there not many applications, but more diverse participants may even be needed.
3. Financial Perspective: International Competition and Global Perspective
As an international financial center, Hong Kong is facing fierce competition from cities such as Singapore, Dubai, and London.In the field of digital finance, many countries and regions are actively exploring the development path of central bank digital currency (CBDC) and stablecoins.For example, Singapore has launched several stablecoin pilot projects, and the EU has also passed the Crypto Assets Market Act (MiCA), providing a clear regulatory framework for crypto assets.
Against this backdrop, Hong Kong needs to have a global perspective and consolidate its position as an international financial center with more open thinking and more innovative policies.The offshore market has a vast space, and international competition requires Hong Kong not only to keep up with the trend, but also to lead the trend.If the stablecoin issuance approval is too cautious, it may cause talent, capital and projects to flow to other more friendly jurisdictions.
On the other hand, financial innovation requires moderate space.The original intention of supervision is to prevent risks, but it should not be at the expense of innovation.Hong Kong can provide testing and iteration opportunities for stablecoin projects through mechanisms such as “regulatory sandbox”, and encourage innovation while controlling risks.77 applications are a starting point, but how to cultivate internationally competitive projects in these applications is the key issue that Hong Kong needs to think about.
4. Dialectics of more and less: Basic principles and infrastructure
Are there more or fewer 77 applications?The answer is not about absolute numbers, but about thinking about how to seize the opportunities of stablecoins?Generally speaking, stablecoin operation requires projects with strong technical strength and clear business model, rather than just not having actual operational capabilities to seize licenses.
Then, the task of regulators is to grasp the basic logic of stablecoin operation and supervision, that is, to encourage innovation, but at the same time protect user rights and maintain an orderly market competition environment.On the one hand, we should like to over-concentrate the most to prevent the market from being monopolized by a few giants; on the other hand, we can also consider a classified and hierarchical supervision model to avoid waste of resources and increased supervision difficulties.
In addition, regulators must realize that the development of stablecoins not only depends on the number of issuers, but also requires the support of supporting infrastructure, including compliant trading platforms, custodians, audit mechanisms and legal frameworks.Hong Kong needs to advance simultaneously in these areas to provide a solid foundation for the widespread application of stablecoins.
5. The road to the future: balancing innovation and supervision
For Hong Kong, stablecoins are both opportunities and challenges.How to find a balance between innovation and regulation will directly affect Hong Kong’s competitiveness in the digital finance era.The following points may be worth considering:
Classification and hierarchical supervision mechanism:Different regulatory standards can be designed based on the scale, application scenario and risk level of the stablecoin.For example, stricter regulation is imposed on systemically important stablecoins, while relatively loose rules are adopted for small or specific purpose stablecoins.
International Cooperation:Stablecoins usually have cross-border attributes, and Hong Kong can work with other jurisdictions to jointly develop global standards to avoid regulatory arbitrage and fragmentation.
Encourage innovation experiments:Through the “regulatory sandbox” and pilot projects, a real testing environment for stablecoins is provided to help regulators and market participants better understand their risks and potential.
Strengthen user risk education:As an emerging financial tool, many users may not fully understand the operating mechanism and risks of stablecoins.Strengthening user risk education is an important means to prevent risks.
The 77 stablecoin applications not only reflect the market’s confidence in Hong Kong as a financial center, but also reveal the huge potential of the stablecoin industry.From the perspective of application scenarios and industry empowerment, this quantity may not be enough to meet the needs of the future market; but from the perspective of regulatory prudence, ensuring the quality and compliance of each application is equally important.
