Offshore Renminbi Stablecoin Accelerates Its Debut: Opportunities and Challenges Coexist

Recently, the development of offshore RMB stablecoin is accelerating. Many tech giants and financial institutions have expressed their intention to apply for stablecoin licenses in Hong Kong, which is seen as an important measure to promote the internationalization of the RMB. At the same time, Hong Kong regulatory authorities are also actively advancing the formulation and implementation of relevant regulations.

Event Review

At the end of May, Hong Kong officially passed the "Stablecoin Ordinance", establishing a licensing system for stablecoin issuers. Subsequently, multiple companies responded to the policy and prepared to apply for licenses:

• Ant Group stated that it will apply for stablecoin licenses in Hong Kong and Singapore.
• JD.com plans to issue a stablecoin pegged to the Hong Kong dollar at a 1:1 ratio.
• More than 40 companies are preparing to apply for a Hong Kong stablecoin license, and the competition is fierce.

The Hong Kong regulatory authorities are rapidly advancing relevant work, and the "stablecoin regulations" will come into effect on August 1. This is seen as a milestone in promoting Hong Kong's status as an international financial center.

Core Discussion

Definition and Clarification of Misunderstandings about Stablecoin

Stablecoins are essentially digital representations of fiat currencies and should be incorporated into the existing financial regulatory framework. Experts have pointed out several common misconceptions:

1. Stablecoins are different from third-party payment platforms, as they have inherent value-bearing functions.
2. The Hong Kong dollar and the US dollar stablecoin have fundamental differences in legal attributes and governance structures.
3. Stablecoins are not completely decentralized and still have centralized characteristics at their core.

Stablecoins are defined as a mapping of fiat currency on the blockchain, representing a digital expression of credit.

new path for the internationalization of the Renminbi

Offshore RMB stablecoins are seen as a new opportunity to promote the internationalization of the RMB. Experts suggest adopting a "dual-track parallel" strategy:

1. Accelerate the construction of the central bank digital currency.
2. Exploring the Development of Renminbi Stablecoin in the Offshore System

It is recommended to first break through the Hong Kong offshore market, focusing on specific scenarios such as cross-border payments, in coordination with the digital RMB.

stablecoin model design

Industry insiders have proposed some constructive ideas:

• Build a "dual-layer architecture" for central bank digital currency and RMB stablecoin
• Let central bank digital currencies take on wholesale functions, while stablecoins are used for cross-border and retail payments.
• Hong Kong serves as a testing ground, accumulating experience to promote in specific areas of the mainland.

Hong Kong Regulatory Attitude

Hong Kong adopts a "licensing system + sandbox experiment" approach to establish a high-threshold access and regulatory system. The main regulatory requirements include:

1. Sufficient Reserves and Asset Security
2. Stability Mechanism and Redemption Guarantee
3. Limitation of Business Scope
4. Local Entities and Governance Requirements
5. Anti-Money Laundering and Cross-Border Compliance

Regulators emphasize that stablecoins are not speculative tools, but payment means based on blockchain. The goal is to prevent risks while reserving development space for emerging industries.

The Odds of Challenging the Dollar Hegemony

The RMB stablecoin faces multiple challenges in its bid to challenge the dollar's hegemony:

1. Payment efficiency: Technically advantageous, but may narrow with regulatory standardization.
2. Institutional Credibility: It is necessary to enhance the international credit of the RMB and strictly implement reserve transparency.
3. Compliance and Global Collaboration: Expanding International Recognition through Hong Kong Licensing
4. Network effects: Need to quickly accumulate user groups and usage scenarios.

In the short term, it is difficult to shake the status of the US dollar, but competition has already begun in the digital finance sector. Long-term development depends on the pace of financial opening in China and the confidence of the international community.

Other Potential Challenges

1. Market Trust: It is necessary to shape credit endorsement at the policy and operational levels.
2. International political environment: may face suppression from the United States and others.

Overall, the RMB stablecoin carries new hopes for the internationalization of the RMB, but also faces complex challenges. This marks the beginning of a protracted battle, where the RMB will strive for greater usage and recognition through this new vehicle of stablecoin. In the future, there may be a coexistence and competition of various fiat stablecoins, promoting the global monetary system to evolve towards a more diversified and balanced direction.