Issuances to play big role in boosting efficiency, cross-border transactions

Chinese mainland internet heavyweights have accelerated steps to apply for stablecoin licenses in Hong Kong as the city's Stablecoins Ordinance will come into effect on Aug 1.

This, industry experts said, is a significant step that will lower cross-border transaction costs and improve the efficiency of international payments.

Christopher Hui, secretary for Financial Services and the Treasury of the Hong Kong Special Administrative Region government, said the authorities aim to issue stablecoin licenses this year, although the number will likely remain in the "single digits".

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More than 40 companies are preparing to submit their applications. They are mostly leading internet companies, large financial institutions and payment processors.

A stablecoin is a form of cryptocurrency that is pegged to fiat currencies or other real-world assets at a designated exchange rate to maintain a stable value. The Legislative Council of the HKSAR passed the Stablecoins Bill in late May, formulating a licensing regime for fiat-referenced stablecoin issuers in Hong Kong.

Liu Qiangdong, chairman of Chinese mainland e-commerce giant JD, said the company hopes to apply for stablecoin licenses in major currency countries worldwide to cut cross-border payment costs by 90 percent and enable settlements to be completed within 10 seconds.

The company is preparing to apply for a stablecoin license in Hong Kong through its local arm. Jingdong Coinlink Technology Hong Kong entered the Hong Kong Monetary Authority's stablecoin sandbox in 2024. The project is testing tokens pegged to the Hong Kong dollar and other major currencies.

Ant International, the overseas arm of financial technology giant Ant Group, has confirmed that it plans to apply for an issuer license of fiat-referenced stablecoins in Hong Kong.

The company has said previously that it is accelerating investments and expanding banking partnerships in global treasury innovations, to transform its cutting-edge AI, blockchain and stablecoin technologies into reliable, large-scale real-world applications.

Wang Pengbo, a senior analyst at market consultancy Botong Analysys, said the accelerated application of stablecoin licenses in Hong Kong demonstrates that these firms are upbeat about the development prospects of stablecoins in cross-border payments and supply chain finance, which will further boost the growth of their existing businesses.

He noted that stablecoins can serve as efficient and low-cost settlement tools, improving the efficiency of cash flow and reducing the risk of exchange rate fluctuations. "Hong Kong's Stablecoins Ordinance has relatively high thresholds and only large companies and institutions can apply for stablecoin licenses."

However, applying for such licenses poses challenges for companies as they need to meet strict regulatory requirements for capital and operations, and pool a large amount of resources in establishing a compliance system, Wang said.

More efforts should be made to strike a balance between bolstering innovation and mitigating risks, as well as adapt to the regulatory discrepancy in different countries and regions, Wang added.

Ant Digital Technologies, Ant Group's digital technology subsidiary, said it has begun the application process for a stablecoin issuer license in Hong Kong.

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Bian Zhuoqun, vice-president of Ant Group and president of blockchain business at Ant Digital Technologies, said the company has already held multiple rounds of discussions with regulators in Hong Kong, and emphasized that stablecoins — which serve as a bridge between traditional finance and tokenized assets — hold significant market potential.

"Their core value lies in expanding application scenarios and ensuring compliance," Bian said, adding that the company is committed to building a stablecoin-based digital trading ecosystem, and driving the development of technology-centric new asset categories by leveraging its industrial and technological expertise.

By providing secure, reliable and compliant infrastructure, the company hopes to create more markets for stablecoin transactions and enhance trading efficiency and liquidity, Bian added.

Contact the writer at fanfeifei@chinadaily.com.cn