In recent financial circles, few topics have generated as much buzz as stablecoins. From Wall Street veterans to Hong Kong regulators, the conversation around digital currency innovation is intensifying. With new legislation paving the way for regulated stablecoin issuance in both the U.S. and Asia, investors are turning their attention to financial instruments that offer meaningful exposure to this emerging sector.
Among the available investment vehicles, one exchange-traded fund stands out: Fintech ETF (159851). This ETF not only captures the momentum of financial technology but also carries significant exposure—over 21%—to companies involved in stablecoin development and digital RMB infrastructure.
Regulatory Momentum Fuels Stablecoin Growth
The global regulatory landscape for stablecoins is evolving rapidly, creating a foundation for institutional adoption.
In May 2025, the U.S. Senate passed the GENIUS Act, establishing a clear regulatory framework for stablecoin issuers. Just two days later, Hong Kong’s Legislative Council approved its own Stablecoin Ordinance, set to take effect on August 1, 2025. The ordinance introduces a licensing regime for stablecoin issuers and mandates that Hong Kong-dollar-pegged stablecoins maintain full reserves in港元 or equivalent low-risk assets.
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This dual regulatory progress has sparked strong market reactions:
- Guotai Junan International surged 198% after receiving approval from the SFC to expand its license to include virtual asset trading services.
- The A-share Fintech ETF (159851) rose 7.45% on the same day, reflecting investor confidence in fintech innovation.
- In the U.S., Circle, issuer of the USDC stablecoin and often referred to as the "first stablecoin stock," saw its share price climb 482% within a month of its IPO, surpassing a $40 billion market cap despite debate over valuation.
While direct investment in stablecoins remains restricted for mainland Chinese investors, public markets offer indirect access through equities and ETFs tied to the broader ecosystem.
Key Players Building the Stablecoin Ecosystem
As regulation clarifies, traditional financial institutions and tech giants are stepping into the stablecoin arena.
Major Participants in Hong Kong
Four primary players are shaping Hong Kong’s stablecoin landscape:
- Standard Chartered Bank, partnering with Ant Group and HKT, has formed a joint venture to test stablecoin issuance within a regulatory sandbox.
- JD ChainTech and Yuanbei Innovation Tech have formally applied for licenses to issue HKD-pegged stablecoins.
- Ant Group is preparing applications in both Hong Kong and Singapore.
Additionally, nearly 40 licensed institutions now offer virtual asset trading via integrated accounts. These include:
- TF International (subsidiary of Tianfeng Securities)
- Harvest Securities (affiliated with East Money Information)
- Futu Securities (Hong Kong)
- Interactive Brokers
- Zhongqi Futures
- ZA Bank
Globally, major banks like HSBC and Barclays are also advancing their stablecoin strategies, signaling broad institutional acceptance.
How Do Stablecoins Generate Revenue?
Understanding the business model behind stablecoins reveals where value flows in the ecosystem.
Key components of the stablecoin value chain include:
- Issuance
- Custody & reserve management
- Technology infrastructure
- Payment processing
- Compliance & auditing
- End-user applications
Among these, issuance, custody, and reserve management are the most critical—and profitable—segments.
Take Tether (USDT): its revenue comes from:
- Deposit/withdrawal fees
- Verification charges
- Minting service fees
- Investment returns on reserves (primarily short-term U.S. Treasuries)
Circle’s USDC, while offering free minting, follows a similar model. Notably, USDC’s reserves are audited monthly and held in cash and Treasuries, with BlackRock managing the short-term bond portfolio, which makes up about 92% of total reserves.
Hong Kong dollar-pegged stablecoins are expected to follow a comparable structure, using港元 cash or short-term government debt as backing.
Technology Infrastructure: The Hidden Backbone
Behind every stablecoin transaction lies a complex web of financial IT systems.
Companies involved in:
- Blockchain architecture
- Digital wallet development
- Payment gateway integration
- Cybersecurity solutions
…are essential enablers of the ecosystem. Many of these firms are publicly listed in China and already part of the fintech investment universe.
As traditional finance converges with decentralized systems, the demand for secure, scalable infrastructure will only grow.
Why Fintech ETF (159851) Stands Out
Among all available indices, the CSI Fintech Theme Index—tracked by Fintech ETF (159851)—offers one of the highest concentrations of exposure to stablecoin-related innovation.
With 57 constituent stocks, this index includes leading players such as:
- Lakala (payment solutions)
- Sifang Jinchuang (blockchain integration for banks)
- Hengbao Shares
- Feitian Technologies
Collectively, companies linked to stablecoins and digital RMB account for 21.63% of the index weight—making it a prime vehicle for investors seeking exposure to next-generation financial infrastructure.
The index emphasizes cutting-edge sectors including:
- Financial IT systems
- Internet brokerage platforms
- Mobile payment clearinghouses
- Blockchain-based financial services
- AI, cloud computing, and big data applications in finance
It represents the frontier of modern finance—where technology meets capital markets.
Investment Profile: High Growth, High Flexibility
Small-Cap Dominance with Strategic Concentration
As of June 2025:
- Average market cap: 228.9 billion CNY
- Median market cap: 102.16 billion CNY
- Nearly half of constituents have market caps below 100 billion CNY
This small-cap tilt contributes to higher volatility—and greater upside potential.
However, concentration exists at the top:
- Top two holdings: East Money and Tonghuashun (both over 1 trillion CNY)
- Top ten holdings account for 51.2% of total index weight
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Exceptional Market Responsiveness
The index is known for its explosive upside during bullish turns.
For example:
After policy stimulus launched on September 24, 2024, Fintech ETF (159851) gained 117% in just over a month (through November 5). Six of the top ten holdings doubled in value during that period.
The index reached a new high again on June 27, 2025, demonstrating sustained momentum.
Annualized volatility stands at 43.55%, well above most sector indices—making it ideal for tactical allocation rather than passive holding.
Long-Term Performance: Resilience in Downturns
Despite its high-beta nature, the index has delivered consistent long-term results:
| Period | Outperformance vs. CSI 300 |
|---|---|
| 2022 | +0.47% |
| 2023 | +22.65% |
| 2024 | +17.68% |
Over five years (as of July 1, 2025):
- CSI Fintech Theme Index total return: +30.8%
- CSI 300 Total Return Index: +4.59%
Even during bear markets, the index showed surprising resilience—outperforming benchmarks when many growth sectors faltered.
Frequently Asked Questions
Q: What is a stablecoin?
A: A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset like a fiat currency (e.g., USD or HKD) or commodities.
Q: Can I invest directly in stablecoins?
A: For most retail investors in mainland China, direct investment in stablecoins is not permitted. However, you can gain indirect exposure through ETFs like Fintech ETF (159851), which holds companies involved in the ecosystem.
Q: How does regulation affect stablecoin investments?
A: Clear regulations—like those recently passed in the U.S. and Hong Kong—reduce uncertainty and encourage institutional participation, boosting investor confidence and market liquidity.
Q: Is Fintech ETF (159851) suitable for conservative investors?
A: No. With high volatility and small-cap exposure, it's best suited for balanced or aggressive investors (C3 risk level or higher).
Q: What percentage of Fintech ETF is related to digital RMB?
A: Approximately 21.63% of the index consists of firms engaged in digital RMB infrastructure or stablecoin-related technologies.
Q: Are there risks in investing in fintech-themed ETFs?
A: Yes. These include regulatory changes, technological disruption, high volatility, and concentration risk. Always assess your risk tolerance before investing.
Final Thoughts: Positioning for the Future of Finance
As Wall Street puts it: “We’re building the financial internet of the next decade.” Stablecoins are no longer fringe experiments—they're becoming core components of global payment and settlement systems.
While still early stage, especially in Asia, the trajectory is clear. Regulatory clarity, institutional adoption, and technological maturity are aligning to drive long-term growth.
👉 Learn how you can participate in the next wave of financial innovation today.
For investors seeking exposure without direct crypto ownership, Fintech ETF (159851) offers a compelling gateway—blending innovation, agility, and strategic relevance in an evolving digital economy.
Note: This article references indices and securities for informational purposes only. It does not constitute investment advice. Past performance is not indicative of future results. Invest with caution.