A group of cryptocurrency and blockchain enthusiasts has put forth a proposal urging the Hong Kong government to issue its stablecoin tied to the region’s dollar. The move aims to challenge the dominance of existing stablecoins like Tether and USD Coin, according to a report authored by four individuals associated with financial innovation.
These individuals include Wang Yang, vice president for institutional advancement at Hong Kong University of Science and Technology; Cai Wensheng, founder of smartphone software firm Meitu; Lei Zhibin, honorary chair of the Hong Kong Blockchain Association; and Wen Yizhou, a doctoral student.
The report suggests that issuing a stablecoin pegged to the Hong Kong dollar would not only solidify the region’s leadership in the blockchain sector but also accelerate the development of a digital Hong Kong dollar. The authors argue that this move would enhance transaction efficiency, reduce costs, improve existing payment systems, and strengthen Hong Kong’s fintech capabilities.
Furthermore, they believe that a Hong Kong Dollar stablecoin would boost the efficiency and inclusiveness of the financial system, offering stability, freedom of exchange, high security, openness, and cross-border liquidity to support a wider range of financial innovations.
The authors criticize the government’s current approach of encouraging private institutions to issue stablecoins tied to the Hong Kong dollar as being too conservative. They highlight Hong Kong’s significant foreign exchange reserves, which stand at approximately $430 billion as of March 2023, surpassing the combined market capitalization of Tether and USD Coin, estimated at around $120 billion.
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Hong Kong has been actively fostering its position in the digital economy, forming a task force in June to oversee the development of Web3.
