- Hong Kong is launching a stablecoin pegged to the region’s dollar in an effort to compete and challenge the dominance of the US dollar.
- This comes in response to several calls for the government to create a stablecoin to reap its many benefits.
In an effort to seal its leadership in the crypto and blockchain ecosystem, Hong Kong is releasing a stablecoin to compete with the popular ones in the industry. According to reportsthe stablecoin would be pegged to the Hong Kong dollar.
Over the years, some financial innovators have called on the government to introduce HKDG (Hong Kong Dollar Government) to support and largely contribute to the digital economy. This is reported by Chinese crypto reporter Colin Wu.
Among the many advocates, four people, namely: “Wang Yang, vice president for institutional advancement at Hong Kong University of Science and Technology, Cai Wensheng, founder of smartphone software company Meitu, Lei Zhibin, an honorary president of the Hong Kong Blockchain Association , and Wen Yizhou, PhD student who co-authored the paper, were the most active.
Under the proposal, the HKDG would have the ability to challenge the dominance of the US dollar and make monitoring and risk assessment easier by providing liquidity for government projects. It can bridge a longstanding gap of inclusivity while ensuring efficiency within the financial space. In addition, its merits, including openness, stability, security and cross-border liquidity, could facilitate financial innovation.
Issuing a stablecoin pegged to the Hong Kong dollar not only helps to strengthen Hong Kong’s leadership in the blockchain sector, but also boosts the advancement of the digital Hong Kong dollar, improving transaction efficiency, reducing transaction costs, current payment systems will be improved and the Hong Kong dollar will be further strengthened. Kong’s fintech capabilities.
Learn more about the Stablecoin in Hong Kong
The authors strongly believed that the approach to getting private firms to issue this Hong Kong dollar-pegged stablecoin is too conservative. They also cited in the report that the country’s foreign exchange reserves stood at $430 billion as of March 2023. This is more than the combined market cap of USDT and USDC.
HKDG backed by the SAR [special administrative region]the government will have greater credibility and lower risk, […] especially as USDT’s credibility remains in question and USDC has recently been heavily discounted.
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However, the report acknowledges that there may be problems with this implementation. This may include legal and regulatory challenges, illicit financing and money laundering, etc. However, the risk may be lower if the stablecoins are issued by the government rather than a private institution.
On June 30, the Hong Kong government established a task force to oversee the development and growth of Web3. This task force consisted of 11 government officials and 15 industry participants.
Hong Kong’s finance secretary, Paul Chan, explains that the country wants to accelerate innovative exploration and development. In addition, they are trying to introduce more application models and also attract heavyweight companies to build the ecosystem.
As of March 20, 80 virtual asset-related companies reportedly expressed interest in establishing themselves in the region. It may be recalled that on June 10, Johnny Ng, a member of the Legislative Council of Hong Kong, invited global virtual asset trading platforms to move to Hong Kong for a virtual asset service provider license.
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