The iconic line from Wall Street — “Money never sleeps” — rings truer than ever in today’s interconnected financial world. As New York, London, and Hong Kong sequentially open and close their markets, they seamlessly cover all 24 global time zones, forming the backbone of the "New York-London-Hong Kong" (NLH) financial axis.
Yet history shows that leadership in global finance is never guaranteed. Competitors like Singapore — also in the UTC+8 zone and operating under a common law system — have emerged as serious contenders. According to the Global Financial Centres Index (GFCI), Hong Kong and Singapore have repeatedly swapped positions for third place since 2020.
Now, a new player is reshaping this rivalry: stablecoins.
On June 5, Circle, the issuer of the world’s second-largest stablecoin USDC, went public on the NYSE with a first-day surge exceeding 168%. This milestone has thrust stablecoins into the spotlight, signaling a pivotal moment in digital finance.
Behind the scenes, major economies — the U.S., Europe, and China — are aligning on regulatory frameworks for stablecoins. The reason? These digital assets offer decentralization, borderless transactions, and low-cost settlement — features that could redefine the future of global finance. Some even view stablecoins as a modern evolution of the Bretton Woods system, replacing traditional bank-based cross-border payments with instant, blockchain-powered alternatives.
From just $20 billion in market value in 2020, global stablecoin assets have skyrocketed to $250 billion by May 2025 — a tenfold increase. Citi forecasts that under clear regulation, this figure could reach $1.6 trillion by 2030.
In this high-stakes race for financial supremacy, stablecoins are emerging as one of the most critical battlegrounds.
👉 Discover how stablecoins are transforming global finance — and why timing matters now.
A Regulatory Milestone: Hong Kong’s Strategic Entry
On May 21, 2025, Hong Kong’s Legislative Council passed the Stablecoin Bill, establishing a licensing regime for fiat-backed stablecoin issuers. Published on May 30, the law will take effect on August 1, marking a watershed moment for digital finance in Asia.
The Financial Services and Treasury Bureau emphasized that the regulation adopts a risk-based approach, aiming to build a robust supervisory framework while reinforcing Hong Kong’s status as a leading international financial center.
This move places Hong Kong alongside other global regulators advancing stablecoin oversight — including the U.S., EU, and Singapore — all racing to shape the future of tokenized money.
As肖风 (Xiao Feng), Chairman and CEO of HashKey Group, noted:
“The U.S. is pushing stablecoin legislation to cement the global dominance of tokenized dollars — a shift from ‘petrodollar’ to ‘on-chain dollar.’ Hong Kong’s move follows the same logic. Losing this race means surrendering influence over global trade settlement.”
Regulatory clarity is now the dominant trend in crypto. The competition isn’t just about technology or adoption — it’s about which jurisdiction can offer the most credible, balanced framework for stablecoin innovation.
Hong Kong’s answer? The concept of “designated stablecoins.”
The “Designated Stablecoin” Model: A Unique Regulatory Framework
Unlike the EU’s MiCA regulations or Singapore’s tiered licensing model, Hong Kong introduces a novel value-anchored regulatory approach.
According to Guotai Junan International’s Chief Economist Zhou Hao, a “designated stablecoin” refers to any digital token pegged to one or more official currencies — particularly the Hong Kong dollar — or other value units designated by the Hong Kong Monetary Authority (HKMA).
The regulation targets two key activities:
- Issuance of designated stablecoins within Hong Kong.
- Issuance outside Hong Kong of tokens claiming to be pegged to the HKD.
This ensures that any stablecoin tied to the Hong Kong dollar falls under local oversight, regardless of where it’s issued — a world-first in regulatory scope.
HashKey Group Chief Analyst Ding Zhaofei highlights that this model gives Hong Kong a strategic edge:
“It covers all HKD-pegged stablecoins globally. Whether issued locally or offshore, if it claims to represent the Hong Kong dollar, it must comply.”
Compared to Singapore’s experimental, innovation-friendly stance — which allows pilot programs and tolerates regulatory gray zones — Hong Kong takes a more cautious, bank-like approach. Stablecoins are treated as virtual banking substitutes, subject to rigorous capital, reserve, and anti-money laundering requirements.
While both cities aim to lead in digital finance, their divergent paths may encourage regulatory arbitrage, where issuers choose jurisdictions based on leniency. To prevent risks, experts urge stronger coordination on reserve audits and cross-border information sharing.
Hong Kong’s ambitions extend beyond stablecoins. On June 4, Financial Secretary Christopher Hui announced that the Securities and Futures Commission (SFC) is exploring virtual asset derivatives for professional investors, with new risk management rules and a second virtual asset policy white paper expected soon.
Clearly, Hong Kong isn’t just preserving its legacy as a financial hub — it’s reinventing itself as a global virtual asset nexus.
👉 See how leading financial hubs are embracing blockchain innovation today.
Real-World Applications: Cross-Border Payments and RWA
Stablecoins aren’t theoretical — they’re solving real problems in cross-border payments and real-world asset (RWA) tokenization.
Traditional international wire transfers rely on SWIFT and clearinghouses, often taking up to five days and costing an average of 6.35% per transaction (World Bank data). In contrast, stablecoin settlements are near-instant — usually under one hour — with fees often below $1 on high-performance blockchains.
JD Group economists Shen Jianguang and Zhu Taihui emphasize this efficiency gap:
“Stablecoins bypass banking bottlenecks, enabling direct peer-to-peer settlement on decentralized networks. This strengthens major currencies’ roles in global trade.”
Beyond payments, Hong Kong is becoming a top destination for RWA financing — often called “mini-IPOs.” In August 2024, Langxin Group completed China’s first mainland corporate RWA deal in Hong Kong, raising ~100 million RMB by tokenizing EV charging stations with technical support from Ant Digital Technologies.
RWA tokenization turns illiquid assets like real estate, bonds, or infrastructure into tradable digital tokens. Stablecoins serve as the ideal medium for pricing and settling these transactions.
CITIC Securities notes that stablecoins enhance liquidity, reduce transaction costs, and unlock new financial products in sectors like green energy and private credit.
The HKMA plans to release RWA tokenization guidelines in 2025, covering bonds, real estate, and commodities. Using smart contracts, these assets can automate dividend payouts and interest distributions — bridging traditional finance with blockchain efficiency.
Even government debt could back stablecoins. Some analysts suggest U.S. Treasury bonds are already being used as reserves for dollar-pegged tokens — effectively turning stablecoins into a new distribution channel for national debt.
National Financial & Development Lab senior researcher Zhao Yao warns:
“If stablecoins become a dumping ground for short-term Treasuries, speculative risks could spill over via maturity mismatches. We must monitor how crypto volatility impacts sovereign debt markets.”
Stablecoins vs. CBDCs: Complementary Paths Forward
Though both use blockchain tech, stablecoins and central bank digital currencies (CBDCs) differ fundamentally.
- CBDCs are digital versions of sovereign currency (e.g., digital yuan), issued and controlled by central banks.
- Stablecoins are privately issued tokens backed by reserves (cash, bonds), operating on decentralized networks.
Guosen Securities’ Wang Jian explains:
“We now have two parallel tracks: multilateral CBDC bridges like mBridge for institutional settlement, and stablecoins for decentralized commerce.”
Shen Jianguang and Zhu Taihui argue they’re not rivals but complements:
- Retail CBDCs (like e-CNY) focus on domestic use: shopping, transit, utilities.
- Wholesale CBDCs serve interbank settlements.
- Stablecoins thrive in cross-border B2B payments, offshore markets, DeFi, and crypto trading — where “payment equals settlement.”
Concerns about stablecoins undermining monetary sovereignty are valid but manageable. Experts suggest:
- Limiting domestic usage.
- Requiring transparent reserve management.
- Gradual rollout.
- Integrating stablecoins into open market operations.
Globally, policy is shifting toward coexistence — not competition — between CBDCs and regulated stablecoins.
For Hong Kong, developing HKD-pegged stablecoins also creates space for offshore RMB innovation. With USDT and USDC dominating over 90% of the market (IMF), there’s room for RMB-backed stablecoins, potentially backed by Chinese government bonds.
Zhao Yao suggests:
“Hong Kong can serve as a testbed for RMB stablecoins. This could inform future mainland policy and accelerate RMB internationalization.”
👉 Explore how digital currencies are redefining global monetary power — start here.
Frequently Asked Questions (FAQ)
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, HKD) or commodities like gold.
Q: Why is Hong Kong regulating stablecoins now?
A: To maintain its status as a global financial hub by creating a clear legal framework that attracts innovation while managing risks like money laundering and financial instability.
Q: How do stablecoins differ from central bank digital currencies (CBDCs)?
A: CBDCs are government-issued digital cash; stablecoins are privately issued but asset-backed. They serve different purposes but can coexist in modern finance.
Q: Can stablecoins replace traditional banking?
A: Not fully, but they can complement it — especially in cross-border payments and tokenized asset markets where speed and cost matter most.
Q: Are all stablecoins regulated in Hong Kong?
A: Only those pegged to the HKD or claiming to represent its value are regulated under the new law. Other stablecoins may operate freely unless they target HKD equivalence.
Q: Could Hong Kong launch its own central bank digital currency?
A: While not currently planned, the HKMA participates in multilateral CBDC projects like mBridge. For now, regulated stablecoins are the priority.