The stablecoin war has begun! How can Hong Kong seize the trillion-dollar market and become the new global financial powerhouse?

Recently, the hottest investment vehicles are stablecoins. According to a report by JPMorgan, as of the second quarter of 2025, the total market capitalization of global stablecoins has exceeded $230 billion. Currently, several major domestic companies, such as Alibaba and JD.com, have also announced their entry into stablecoins. Additionally, in May of this year, the Legislative Council of the Hong Kong Special Administrative Region passed the "Stablecoin Bill" in the third reading, and it was officially legislated on May 30, marking the implementation of the world's first comprehensive regulatory framework for fiat stablecoins. At the same time, Huaxia Fund (Hong Kong) also launched multiple tokenized funds in July, positioning itself in the stablecoin financial product market.

However, so far, many people still believe that stablecoins are tools for capital to harvest retail investors. But I want to tell everyone that behind stablecoins is actually a financial innovation triggered by cryptocurrencies, quietly reshaping the underlying logic of the global monetary system.

1. Stablecoin: The "wetland" connecting fiat and Bitcoin

In simple terms, a stablecoin is a type of cryptocurrency that attempts to maintain a stable coin value by anchoring to fiat currencies (such as the US dollar, Hong Kong dollar) or physical assets (such as gold), relying on blockchain technology. Because stablecoins are anchored to fiat currencies or gold, their prices are less volatile. Compared to cryptocurrencies like Bitcoin and Ethereum, stablecoins are more suitable as payment, storage, and cross-border settlement tools.

If fiat is the land on Earth and Bitcoin is the ocean, then stablecoins are like the wetlands connecting the two. Fiat is issued and endorsed by sovereign states, characterized by stable value, legal protection, and strong regulation, but these characteristics also make fiat inefficient for international payments, with high transaction fees and difficulties in international settlement. Bitcoin represents a means of free flow and quick settlement in a decentralized scenario, but its value is highly volatile and it has strong anonymity, resulting in a lack of fundamental conditions for widespread application in mainstream economic activities.

Stablecoins serve as intermediaries, combining the advantages of both – they can be pegged to real assets, which ensures value stability; and they are issued and circulated based on blockchain networks, offering higher transaction efficiency and lower transaction costs, making them one of the key elements of future digital financial infrastructure.

Imagine a scenario: you need to conduct a cross-border transaction of 20 million USD. In the past, businesses used the SWIFT system for USD transfers in cross-border payments, which not only took a long time to arrive but also incurred relatively high fees, roughly between 5% to 10%. If a holiday occurs, the waiting time becomes even longer. If you use stablecoins for the transfer, it can be completed quickly, arriving in seconds, and the cost is very low. At this point, would you choose stablecoins? The answer is obvious.

II. The International Situation and Strategic Significance of Stablecoins: The "Digital Moat" of Dollar Hegemony

Stablecoins may seem like just a derivative product of crypto finance, but they have actually become a new pawn in international games. It can even be said that they are a strategic piece set out by the United States in its attempt to reshape the global financial "narrative power."

95% of stablecoins around the world are pegged to the US dollar. As the demand for US dollar stablecoins increases, the scale of US dollars or US Treasuries that stablecoin issuers need to hold will also grow larger and larger, effectively locking private sector funds into a US dollar liquidity pool. Moreover, every circulation of stablecoins requires indirect support from US dollars or US Treasuries, which serves as an indirect endorsement of the US dollar. This further solidifies the US dollar's status as the "global currency."

The U.S. "GENIUS Act" requires that USD stablecoins must be issued by U.S. institutions, essentially competing for the global stablecoin standard-setting power, creating a "digital moat" for dollar hegemony.

As the international landscape continues to evolve, China also faces important choices. As the world's largest goods trading nation, China has a natural strategic demand for optimizing the efficiency and cost of cross-border settlement. The rise of stablecoins provides China with a practical path to lower the threshold for foreign trade payments and enhance financial independence. In traditional cross-border payment systems, funds typically need to go through the SWIFT system, passing through multiple intermediary banks, often resulting in long cycles and high costs, while being subject to Western financial rules. Stablecoins, based on blockchain technology, can achieve real-time settlement on a peer-to-peer basis, significantly improving transaction efficiency, especially suitable for scenarios such as 'Global South' countries, small and medium-sized foreign trade enterprises, and supply chain finance. Stablecoins can enhance the flexibility and efficiency of trade settlements without changing national monetary policies. For an export-oriented country like China, such tools are naturally very important.

3. Hong Kong: The "Right Time, Right Place, Right People" for Stablecoin Development

Many countries around the world, including the UK, Australia, Japan, and South Korea, are currently laying out the development of stablecoins. But I want to say that we have a huge opportunity, and that opportunity is in Hong Kong.

On May 21, the Hong Kong Legislative Council passed the "Stablecoin Bill" in the third reading, and it officially became law on May 30. Hong Kong has also become the first jurisdiction in the world to implement full-chain regulation for fiat stablecoins.

Why Hong Kong? Because in the trend of promoting the development of stablecoins, Hong Kong plays a particularly key role and has unique advantages.

Geographical and Financial Center Advantages: Hong Kong is not only located at the crossroads of East and West, but also serves as an international financial, shipping, and trading center, as well as a global hub for digital asset innovation. Hong Kong has both policy space and a strong talent and technical foundation, along with international market resources. With the backing of the Greater Bay Area, it connects the world's largest manufacturing base with consumer markets, and the demand for cross-border payments by businesses reaches trillions, making it an ideal place to drive innovation and pilot projects for stablecoin.

The foundation of the Hong Kong dollar issuance system: As early as before the rise of cryptocurrencies, Hong Kong had a system foundation similar to a "stablecoin" - the issuance system of the Hong Kong dollar. The Hong Kong dollar is issued by several commercial banks after depositing equivalent US dollar reserves, and this currency board system is essentially a framework for a stablecoin "pegged to the US dollar." The issuance of the Hong Kong dollar is like a paper stablecoin, and now it only needs to be digitized and placed on the blockchain to smoothly enter the main battlefield of global financial technology innovation.

Regulatory Leadership: The official implementation of the "Stablecoin Act" will mark Hong Kong's leading position in financial regulatory compliance on a global scale.

Promoting the Internationalization of the Digital Renminbi: In the long run, the stablecoin innovation in Hong Kong not only serves the local market but may also become a bridge to promote the internationalization of the "Digital Renminbi," driving China to play a more proactive role in the global financial system.

IV. Stablecoin Derivative Products and Leading Practices in Hong Kong

No matter how strong the layout is, it still needs practical products to support it. Currently, Hong Kong already has a variety of leading stablecoin derivative products, such as the cryptocurrency ETF series and tokenization funds issued by Hua Xia Fund (Hong Kong).

Huaxia Hong Kong is one of the first companies to issue cryptocurrency spot ETFs. As early as April 30, 2024, Huaxia Hong Kong launched the Huaxia Bitcoin ETF and the Huaxia Ethereum ETF, making it one of the first asset management companies in the Asia-Pacific region to launch Bitcoin and Ethereum ETFs. The Huaxia Bitcoin ETF (3042HK) has performed exceptionally well since its listing, with its value doubling over the past year.

In addition to the above spot ETF products, tokenized funds also serve as a bridge between traditional finance and WEB3 assets. As early as February this year, Huaxia Hong Kong launched the Asia-Pacific's first retail tokenized fund "Huaxia Hong Kong Dollar Digital Currency Fund", allowing investors to obtain Hong Kong dollar currency fund returns through blockchain tools, rather than being trapped in so-called "non-cash generating" dead assets. Furthermore, last week, on July 17, Huaxia Hong Kong issued the world's first RMB tokenized fund "Huaxia RMB Digital Currency Fund", as well as Asia's first USD tokenized fund "Huaxia USD Digital Currency Fund". Huaxia Hong Kong leverages its market advantages in tokenized funds to create an innovative combination of "stablecoin + tokenized fund" for the future issuance of stable currency funds.

Especially the Renminbi digital currency fund, the total amount of offshore Renminbi has been continuously increasing in recent years, which provides a fertile ground for the development of offshore Renminbi stablecoins that meet the demand for yield. Huaxia Hong Kong is currently the only asset management company fully participating in the three major sandbox programs of the Hong Kong Monetary Authority (CBDC, Digital Hong Kong Dollar+, Stablecoin), leading significantly in terms of product quantity, scale, and market recognition, and has become the leading company in the digital asset field across the entire Asia-Pacific region.

If it is said that Hong Kong has quietly seized the commanding heights of next-generation financial infrastructure, then Huaxia Hong Kong, which took the lead in action, is now standing at the crest of the wave.

5. How to view stablecoins in this financial revolution?

Finally, the question arises: how should we ordinary people view stablecoins and this financial revolution?

First of all, I personally believe that stablecoins should not be equated with "risk-free assets," because even fiat-backed stablecoins may incur losses due to issuer bankruptcy, sudden policy changes (such as the U.S. banning non-U.S. dollar stablecoins), or even devaluation of the fiat currency. Secondly, one should participate rationally in the allocation of stablecoins. If you want to invest in cryptocurrencies, you can treat stablecoins as a hedging position, but be careful to control the position, ideally keeping it within 10% of the total assets, and not putting everything in.

But one thing is certain: as major markets like Hong Kong and the United States establish regulatory rules, stablecoins are moving from the gray area to the mainstream financial stage, where there are many opportunities worth exploring.

History always favors those places that can establish order in chaos. Standing at the folds of history, when the tokenized currency fund of Huaxia Hong Kong breaks through 1 billion USD, we are witnessing a singularity moment in financial history. As ordinary investors, we must understand that this is not a speculative game of stablecoins, but rather an elevated competition of capital carriers. Just like understanding the internet in 1995 and comprehending mobile payments in 2008, the stablecoin revolution of 2025 will redefine the existence of "money." When trillion-dollar assets awaken on the chain, your choice will determine whether you are the guardian of the old order or Columbus of the new world.