Crypto and blockchain advocates have authored a report calling on the Hong Kong government to issue a dollar-pegged stablecoin in the region, which could challenge the dominance of Tether and USD Coin.
According to an English translation of the July 3 report available By Chinese cryptocurrency reporter Colin Wu, four individuals associated with financial innovation Proposal The government has issued a stablecoin HKDG (Hong Kong Government Dollar) to support its leadership efforts in the digital economy. Wang Yang, Vice President for Institutional Advancement at the Hong Kong University of Science and Technology; Cai Wensheng, founder of smartphone software company Meitu; Lei Zhibin, Honorary President of the Hong Kong Blockchain Association; The paper was co-authored by doctoral student Wen Yizhou.
“The issuance of a stablecoin pegged to the Hong Kong dollar not only helps consolidate Hong Kong’s leadership in the blockchain sector, but also promotes the progress of the digital Hong Kong dollar, enhances transaction efficiency, reduces transaction costs, improves existing payment systems, and further strengthens it,” the report said. Hong Kong’s financial technology capabilities. “Furthermore, Hong Kong’s stable dollar currency can enhance the efficiency and inclusiveness of Hong Kong’s financial system; its stability, freedom of exchange, high security, cross-border openness and liquidity can support a wide range of financial innovations.”
Proposal for Hong Kong to issue a Hong Kong dollar stablecoin to compete with USDT/USDC
By the Vice Chancellor of Hong Kong University of Science and Technology and Chairman of Meitu
Read more: https://t.co/pCTxkqMLM7
WuBlockchain July 4, 2023
Yang, Wensheng, Zhibin, and Yizhou argued that the government’s plan to encourage private institutions to issue stablecoins pegged to the Hong Kong dollar was “extremely conservative” in contrast to its intention to promote cryptocurrency and blockchain. The report claimed that Hong Kong’s foreign exchange reserves as of March 2023 totaled nearly $430 billion, “significantly surpassing” the combined market capitalization of Tether (USDT) and USD Coin (USDC) at roughly $120 billion.
“HKDG backed by the SAR (Special Administrative Region) government will have higher credibility and lower risk, (…) especially since USDT’s credibility is still in question, and USDC has recently suffered severe downgrades.”
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Among the benefits the report’s authors believe could come from launching HKDG included challenging the dominance of the US dollar, providing additional liquidity for government projects and making it easier for officials to monitor and assess risks. However, the report cited potential risks, including legal and regulatory challenges, and international disputes over transactions potentially linked to illicit finance and piracy.
“The risks borne by government-issued HKDGs are much lower than those of the Hong Kong dollar stable currency issued by private institutions,” the report stated.
In June, the Hong Kong government announced that it had set up a working group to oversee the development of Web3. Reportedly, more than 80 companies working in digital assets or blockchain had considered setting up in the SAR as of March, in addition to the nearly 800 fintech companies already in Hong Kong.
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