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Blockchain and cryptocurrency enthusiasts in Hong Kong have collectively crafted a document, suggesting an innovative strategy to the local government. This new approach involves the inception of a stablecoin tied to Hong Kong's currency, a development which could unsettle the prevailing hegemony of popular stablecoins like Tether and USD Coin.
The report, which came into existence on July 3, is the brainchild of four eminent figures associated with the financial innovation realm. Among the co-authors are Wang Yang, a notable academic from Hong Kong University of Science and Technology, along with Cai Wensheng, Meitu's founder, and Lei Zhibin, the honorary chair of the Hong Kong Blockchain Association. The team is completed by doctoral scholar Wen Yizhou. Together, they have proposed a government-sanctioned stablecoin, dubbed the HKDG (Hong Kong Dollar Government), as a crucial step in fortifying Hong Kong's leading role in the digital economy.
The consortium asserted that the government's existing plan to promote stablecoins tied to Hong Kong's currency but issued by private firms is exceedingly restrained compared to their ambition to foster crypto and blockchain adoption. The authors spotlighted that Hong Kong's foreign exchange reserves, standing at an impressive $430 billion as of March 2023, substantially eclipsed the cumulative market capitalization of Tether and USD Coin, which is estimated to be around $120 billion.
The initiation of HKDG could bring several advantages, they believed. This includes the potential to dispute the supremacy of the U.S. dollar, to furnish more liquidity for governmental initiatives, and to simplify risk assessment for the authorities. Nevertheless, the report does not overlook possible obstacles, such as legal and regulatory concerns, international contention regarding transactions possibly linked to unlawful funding, and cybersecurity threats.
Furthermore, Hong Kong's government disclosed in June that a task force had been assembled to steer the advancement of Web3. Numerous companies engaged in digital assets or blockchain technology are considering establishing operations in Hong Kong, adding to the existing 800 fintech firms already flourishing in the region.
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