With stablecoin law, Hong Kong looks for ‘first-mover' edge over US, Singapore in payments
With the passage of one of the world's most comprehensive stablecoin laws two weeks ago, Hong Kong is looking to stay at the forefront of global finance while addressing lessons from past industry setbacks, according to analysts.
Being a 'first mover' in stablecoin legislation 'reflects the determination' of the city's government to 'unlock value that they see in this sector, given the number of hurdles from past incidents', said Melvin Deng, CEO of digital asset trading firm QCP Capital.
Hong Kong is one of the first jurisdictions to introduce detailed regulations governing the issuance of stablecoins – cryptocurrencies backed by a reference asset, typically fiat currency like the US dollar – coming ahead of the US Genius Act currently making its way through the Senate. The Hong Kong ordinance
takes effect on August 1
The law also gives the market a lead in Asia, with a friendlier regulatory stance than Singapore's framework introduced last year. South Korea's newly elected president, Lee Jae-myung, has also signalled his intent to move quickly on a campaign pledge to allow private issuance of stablecoins backed by the Korean won.
Combined with the city's vast offshore yuan holdings and China's restricted use of cryptocurrencies on the mainland, the new law has fanned hopes that Hong Kong could secure a prominent spot in the stablecoin market, which is currently dominated by US dollar-backed tokens such as Tether's USDT and Circle's USDC.
Circle, issuer of the world's second-largest stablecoin by trading volume, went public on the New York Stock Exchange on June 5. Photo: Reuters
'Hong Kong's near-simultaneous legislative push with the United States underscores the intensifying East-West contest over financial influence in the digital era,' said Bo Tang, assistant director at the Hong Kong University of Science and Technology's Institute for Financial Research.
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