Editor's note: Hong Kong's digital asset sector has seen a breakthrough. Stablecoin licensing has officially taken effect, and a new regulatory framework for tokenized assets was announced earlier.
Hello everyone, and welcome to DDN Business Insider. I'm your longtime friend, Ding Zhaofei from HashKey Group. Recently, we've seen many positive developments in the digital-asset market. For example, the long-awaited stablecoin licensing has finally been rolled out. In addition, RWE tokenized products on the secondary market are now tradable. With all these updates coming in one after another, what do they really mean behind the scenes—and how might things develop going forward?
Today, I'm honored to invite Professor Tang from The Hong Kong University of Science and Technology to help us understand what's been happening in the digital-asset market recently.
Welcome, Professor Tang. Regarding the Securities and Futures Commission's "green light" for the secondary market, meaning that, under permitted conditions, RWE-type products can be enabled for secondary trading, what does this change signify?
Professor Tang: Because the SFC has allowed tokenized, recognized investment products to be traded on the secondary market, it effectively marks a shift in Hong Kong's tokenization journey from what used to be a primary issuance pilot to now advancing to an ecosystem stage focused on secondary circulation, capital accumulation and trading.
I believe there are several layers of significance here.
First, this is what we can call "closing the institutional gaps." It shows that traditional finance and on-chain finance are moving toward deeper integration. For example, previously, with the introduction of ETFs, more traditional capital could be allocated into on-chain assets. And now, with secondary trading for tokenized traditional assets, even more on-chain capital can move into the traditional financial world and real-economy, tokenized assets.
At the same time, after traditional assets are tokenized, they can also be bought and sold through licensed virtual-asset platforms. In that sense, it truly connects compliant capital, traditional finance, and Web3.
Second, it unlocks liquidity in the secondary market. Previously, most tokenized products could only be issued in the primary market. Once investors bought them, they often found it difficult to transfer or exit. Now, with permission to trade in the secondary market, investors, simply put, can sell their tokens and cash out whenever they want, much like trading stocks. This will greatly enhance the liquidity of tokenized assets.
Third, I think this is also a trading revolution. What does that mean? It means that we can conduct trading through blockchain's underlying infrastructure, enabling near-real-time settlement. Its biggest impact is that it reduces intermediary layers and achieves better trading efficiency and lowers costs.
People often mention "trading 24/7." That means we can buy and sell even at night and on weekends, rather than being limited by trading hours. This also significantly helps improve liquidity.
So, how do the rollout of this policy and the stablecoin licensing we just discussed relate to each other?
Professor Tang: I think these two policies are not independent. They are two core pieces in Hong Kong's efforts to build a Web3 ecosystem, and they are strongly linked and mutually supportive.
How should we understand this? Stablecoins and asset tokenization. For asset tokenization, stablecoins are a foundational layer for clearing and settlement. If we look a bit further into the future, say, in 5 to 10 years, what will financial markets and economic activities look like? I believe that tokenization technology and AI finance will become among the most important parts of economic activity and financial markets.
If that happens, we will need a tokenized clearing and settlement platform. Otherwise, it would be impossible to run an "end-to-end" system, replacing intermediaries through smart contracts to make financial markets more efficient and create an entirely new financial model.
To build a foundation for tokenized clearing and settlement, stablecoins are the basic unit. With stablecoin licensing in place, we have a much higher chance of scaling up and promoting digital assets.
If we look not just at the next one or two years, but at the longer term, Hong Kong must have a regulated stablecoin environment, so that the tokenization process can develop more steadily.
From another perspective, secondary trading of tokenized assets is also a core application scenario for stablecoins. The true value of stablecoins is to become a trading medium for tokenized assets at a scale of potentially trillions of dollars.
So, I believe that compliant stablecoins are an essential cornerstone for the future development of digital finance.
So, we also saw that around 30-plus companies applied for stablecoin licenses, but in the end, only two received them. Why were these two licenses granted? And what are the differences between them?
The two licensed institutions are HSBC and Anchorpoint Financial. Personally, I think their positioning is relatively clear. Their complementarity is greater than their competition.
HSBC is a name that most people are already familiar with—it's one of Hong Kong's note-issuing banks. Its strategy can be described as "retail-led, C-side first." HSBC plans to embed stablecoins directly into applications such as PayMe and the HSBC app. In other words, it follows a B2C direct-to-consumer approach.
As for its positioning, it targets ordinary citizens, focusing on everyday payments, P2P transfers, small cross-border transactions, and investments in tokenized funds, among other use cases.
Now let's look at Anchorpoint Financial. It is a company formed by an alliance of three organizations: Standard Chartered Bank, Hong Kong Telecom (HKT), and Animoca Brands. It is this alliance-backed company that also received the license.
Its strategy—based on analysis—can be summarized as "institution-first, B2B2C." What does B2B2C mean? It means that Anchorpoint Financial does not directly sell stablecoins to end consumers. Instead, it reaches users through selected, approved, and trusted distributors, leveraging their broad customer base and existing application scenarios.
Its positioning is therefore aimed at financial institutions, cross-border e-commerce, Web3 projects, and SMEs. It focuses on trade settlement, supply-chain finance, and on-chain asset settlement, as well as similar business-oriented use cases.
So, if we compare them, personally, I think HSBC focuses on building the everyday wallet for the general public. Anchorpoint Financial focuses on enterprise cross-border settlement and the Web3 ecosystem. They are competitors, but also partners—together, they will work to expand the Hong Kong dollar stablecoin ecosystem.
Regardless of whether it's B-side or C-side, the demand for stablecoins is quite strong. And earlier, Paul Chan Mo-po also mentioned that stablecoins play a powerful role in cross-border trade and payments and may help solve certain long-standing pain points. So, what exactly are these long-term pain points? And once stablecoins are launched, how will they change ordinary people's day-to-day lives?
Cross-border payments have always been one of our long-standing pain points, especially for businesses. Right now, most international cross-border payments are still based on the banking SWIFT system.
Its key features are: first, it is slow. Traditional international remittances often take three to five days. Second, it is expensive because of fees, intermediary bank charges, and FX spreads. Typical fees can range from 1% to 6%, and in some emerging markets, data shows the costs are even higher. For SMEs, this burden is particularly heavy. I think this is the "old problem" in the cross-border payments space.
Looking ahead, a lot of what we talk about now is AI agents and payments between AI agents. If, in the future, economic activities and financial transactions are handled by AI agents, can our legacy banking infrastructure support the high-frequency micro-transactions and real-time automation required for autonomous economic activities executed by AI agents?? I think it may not be the best fit. In that scenario, a digital-currency-based approach could be a better option.
So, whether it is payments between people, payments for enterprises, or future payments between AI agents, there are pain points.
Now to your second question: how would Hong Kong dollar stablecoins change ordinary people's lives? Honestly, in the short term, it may not be dramatically obvious because in Hong Kong, we already have well-developed electronic payments such as Octopus, WeChat Pay, and Alipay.
But in the long run, for ordinary people, the key changes would be:
One is cross-border transfers. If the world were to use on-chain digital money in this form, cross-border transfers could become faster and cheaper than they are today.
For example, if a child is studying abroad and money needs to be sent from overseas, whether it is for family support, or for businesses accepting payments from abroad, or for cross-border consumption, then transfers could land within seconds, with fees potentially much lower than today.
So, to put it simply: for businesses, it means lower cost and higher efficiency and connecting the world. For individuals, it means more convenient, faster, and cheaper options, and an additional choice for everyday payments.
Yes, that is true. The changes for both B-side and C-side could be quite significant.
Now we also know that after licenses are granted, there may be several months before stablecoins actually go live. During these months, what do you think each institution and different parts of the industry chain should prepare?
I think there are three main things.
First, for regulators: they need to implement the licensing rules in detail. That means specifying and refining everything into executable requirements, such as stablecoin reserves audits, redemption mechanisms, anti-money laundering measures, and data reporting.
Second, system integration and testing: they must ensure that the relevant systems can connect and work properly, stablecoin issuance systems, custody systems, trading platforms, and on-chain monitoring systems. All of these need to be configured, tested, and debugged.
Third, investor education is especially important. We know that last year many investors asked me questions like: "Can stablecoins be invested in?" I think regulators also need to clearly tell the public that stablecoins are primarily a payment tool, or a tool for clearing and settlement, rather than an investment product. Stablecoins are priced at 1:1 to the Hong Kong dollar.
Now, for issuers, such as HSBC, Anchorpoint Financial, and potentially future issuers as well, I think they need to prepare:
1.Reserves management: they should prepare high-liquidity Hong Kong dollar assets, 100% in very liquid HKD assets, such as cash and short-term bonds. They also need independent custody and monthly audits.
2.Technology and security: for issuers, protecting against hacking, outages, and "de-pegging" (losing the peg) is crucial. They must conduct stress tests, and ensure everything is in place, from wallets and on-chain systems to cold wallets, and related infrastructure.
3.KYC and AML: they need bank-level identity verification, transaction monitoring, and mechanisms to report suspicious transactions. These processes must all be implemented and live.
Sure. However, as you mentioned earlier, while we enjoy the benefits, we also cannot ignore the potential risks. So, what risks might stablecoins face after they go live, or even during the initial rollout? And what response plans should different parties put in place to handle them appropriately?
I think stablecoins have historically been treated cautiously by regulators because, if you look at the stablecoin model, its underlying structure is very similar to a narrow bank. It is highly analogous to banking.
On one hand, stablecoins may carry bank-like risks, such as bank runs. For example, during extreme market conditions, large-scale redemptions could occur, and stablecoins might lose the peg, meaning they could fall below 1 HKD.
On the other hand, because it resembles a narrow-banking model, it could also disrupt other traditional banks' business models and raise the question of whether it could create additional systemic risks. I think these are issues regulators need to consider.
The second major risk relates to compliance and AML concerns. Since stablecoins are on the blockchain, they are naturally cross-border and can be pseudonymous. We will not call it anonymous, because with real-name requirements, funds can still be traced back to identities. But even so, there are still compliance and money-laundering risks, including the misuse of cross-border transfers and pseudo-anonymous flows. So, the question is: how do regulators monitor and control that?
Besides these risks, another set of initial issues, answering your question about risks and problems at the early stage, could include liquidity shortages. At the beginning, user and merchant adoption may not be high. If people do not understand the product and trading activity remains low, liquidity could become insufficient.
Also, there could be technical and security risks early on, such as hacker attacks, wallet theft, or on-chain system failures. I think these are the kinds of risks and problems that may arise early.
So how should we respond? I think many of these risks are manageable, because we are still in a trial phase. In the early period, we can implement transaction limits, focus on smaller amounts, and then gradually increase capacity. For large transactions, additional manual checks or layered approvals could be introduced to help the market grow more steadily.
For users, investor and consumer education is also crucial, as we discussed earlier. Users need to understand that stablecoins are not something for speculation. It is infrastructure. They should be guided to start with small trials, get familiar with how it works, and then use larger amounts later once they are more comfortable.
Yes, you are absolutely right. Looking back in history, Circle experienced the most severe de-pegging incident, which led to the failure of the bank behind it. That may also be why, for the two licensed companies, bank support is present in the background. So, the biggest possible risk points for stablecoins may ultimately be tied to the banking side.
Thank you very much, Professor Tang, for your insights today, especially your explanations on stablecoins. We have learned a lot about stablecoin-related knowledge. Going forward, if there are any other industry hotspots or major events, we will also provide timely interpretation and analysis.
Thank you, Professor Tang. Thank you, Mr. Ding. And thank you, everyone.
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