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Recently, the Hong Kong Monetary Authority announced that JD Coin Chain Technology (Hong Kong), a subsidiary of JD Technology Group, is one of the first institutions to enter the “sandbox” plan for stablecoin issuers, which is undoubtedly a major news!
It is worth noting that behind JD.com’s issuance of stablecoins, there are two Internet giants, Liu Qiangdong and Lei Jun.Tianxing Bank, a Hong Kong licensed virtual bank under Xiaomi Group, will assist JD.com Coin Chain Technology in developing a cross-border payment solution based on stablecoins.This means that JD.com and Xiaomi may cooperate in the stablecoin field.
The two industry giants’ in-depth layout in the digital currency field is not only a catch-up of past payment market opportunities, but also a forward-looking investment in future financial technology!This article will explore this incident in depth and analyze the reasons why JD.com entered the stablecoin market.
01The Rise of Stablecoins
1. What is a stablecoin
Stablecoins are cryptocurrencies pegged to fiat currencies or other assets, designed to reduce price volatility and provide a relatively stable form of cryptocurrencies like Bitcoin.They are usually pegged to fiat currencies 1:1, ensuring the stability of their value.
2. The market structure of stablecoins
According to the latest market research by The Block, the total market value of stablecoins has exceeded 100 billion US dollars, becoming an important part of the crypto market that cannot be ignored.
Source: https://www.theblock.co/data/stablecoins/usd-pegged/total-stablecoin-supply
Currently, USDT (Tether) accounts for 70% of the stablecoin market and becomes the dominant market.However, if a non-USD-pegged stablecoin, such as JD-HKD, can it make a breakthrough in market share?In addition to the need for a suitable regulatory environment, it is more important to find scenario use cases for Hong Kong dollar stablecoins, and it is particularly important to expand market share through scenario-based applications.
02Coin Chain Technology: The promoter of JD stablecoin issuance
JINGDONG Coinlink is a wholly-owned subsidiary of JINGDONG Technology Group, focusing on the application and development of blockchain technology, and is the only stablecoin issuer under JD.com.The company was officially registered in March this year and was selected into the Hong Kong Monetary Authority’s first batch of participants in the “stable coin issuer sandbox” just 5 months later, and it developed rapidly, which shows JD.com’s vigorous ambitions!
JD Stable Coin, also known as JD-HKD, is a stablecoin based on public chains. Its reserves are composed of highly liquid and trustworthy assets. The specific introduction is as follows:
Anchored with the Hong Kong dollar 1:1, for each unit of stablecoin is issued, JD.com Coin Chain Technology will hold the equivalent value of Hong Kong dollars in its reserves accordingly.
Each JD-HKD can be redeemed at a 1:1 ratio, and its reserves are composed of highly liquid and trustworthy assets and are securely stored in a separate account of a licensed financial institution, regularly disclosed and audited to ensure the integrity of the reserves.sex.
This means that users can use JD stablecoin more with confidence and enjoy a safe and stable digital asset experience.
03The indissoluble bond between JD.com and blockchain
The history of JD.com and blockchain can be traced back to 2017. With the rise of blockchain technology, JD.com began to actively explore this emerging field.
In 2017, JD Finance cooperated with China UnionPay to successfully build the first cross-regional and cross-operator alliance chain “Zhizhen Chain” in China based on public networks.The establishment of this alliance chain not only improves JD.com’s capabilities in blockchain technology, but also lays the foundation for subsequent multi-party cooperation.Subsequently, Wanda Group and China Merchants Bank also joined the alliance chain to form a cooperative network covering multiple industries.
In 2018, JD Finance launched the “JD Digital Asset” based on blockchain technology. In the same year, it also released a blockchain anti-counterfeiting traceability platform, using blockchain technology to achieve full traceability of goods, and improve consumers’ quality of goods.Trust.
In 2021, JD.com launched its own NFT platform “Lingxu”, which is another important attempt by JD.com in the blockchain field.The platform aims to provide users with digital art transactions and collection services, further expanding the boundaries of JD’s application of blockchain technology.
Until July 2024, JD.com Coin Chain Technology (Hong Kong) announced that it would issue stablecoins anchored to the Hong Kong dollar in Hong Kong.
So why did JD.com choose to enter the stablecoin market?
04Reasons for JD.com to enter the stablecoin
Liu Qiangdong has stated on many occasions that JD.com’s layout in the payment field has many regrets, especially in the golden period of rapid development of mobile payment, which failed to follow up in time.JD.com’s vigorous development of stablecoins seems to reflect its determination to strive to catch up after missing the opportunity to develop the payment market.
Therefore, the reasons can be analyzed from many aspects:
1. Enrich financial product line: JD.com’s layout in the financial technology field has begun to take shape, and the launch of stablecoins will further enrich JD.com’s financial product line.Get involved in the crypto industry, attract more users to participate in its financial ecosystem, and provide more diverse financial services, such as lending, investment, etc.
2. Improve cross-border payment efficiency: On the one hand, with the passage of Bitcoin ETFs and Ethereum ETFs, cryptocurrencies have entered the public’s vision more quickly and attracted the attention of global financial markets.The introduction of stablecoins will improve JD’s efficiency in the cross-border payment field, support JD’s internationalization strategy, and make it more competitive in the global market.
3.Most importantly, the profits of issuing stablecoins are quite considerable:According to DeFiLlama data, from the beginning of this year (August 15), the market value of stablecoins has risen by nearly 28.4%, reaching US$166.96 billion.Tether, the issuer of the leading stablecoin USDT, has a profit that is close to Wall Street giants!Net profit in the first half of 2024 reached US$5.2 billion, a record high, and what is even more shocking is that the entire team has only about 100 employees.
However, thinking about this matter further, behind entering the stablecoin market, it actually reflects the anxiety of Chinese e-commerce giants going overseas.
As two giants in China’s Internet industry, JD.com and Xiaomi have achieved great success in the fields of e-commerce and smart hardware respectively.After the epidemic, competition for overseas travel has become increasingly fierce, and cross-border payments have become the top priority.However, challenges such as the efficiency of cross-border payments and geopolitical risks have always plagued these overseas companies.Perhaps in order to seek new growth points, both companies have begun to focus on the fintech and cryptocurrency sectors.
Against this background, JD.com’s stablecoin issuance is particularly important.It is not only a strategic measure for JD to respond to market changes, but also an attempt to improve the efficiency of cross-border payments.Through stablecoins, JD.com hopes to provide users with more convenient payment solutions and overcome existing payment barriers.At the same time, this also provides support for JD.com and even other Chinese e-commerce giants to enhance their competitiveness in the global market.
05Summarize
The strong alliance between JD.com and Xiaomi has entered the stablecoin market, marking a new round of layout of the two industry giants in the financial technology field.This move is not only a catch-up of past payment market opportunities, but also a deep investment in the future digital economy.
With the continuous development of the stablecoin market, whether JD.com and Xiaomi can achieve a counterattack in this wave is worth our continuous attention!
