Hong Kong Experts Advocate for Government-Backed Stablecoin HKDG to Challenge USD
As Hong Kong solidifies its position as a leading hub for crypto assets and blockchain technology, a group of experts, including the Chief Scientific Advisor of the Hong Kong Web3.0 Association, has proposed the issuance of a government-backed stablecoin called “HKDG.” This stablecoin, linked to the Hong Kong dollar (HKD), aims to provide a highly reliable and low-risk alternative to privately issued stablecoins such as USDT and USDC.
The proposal highlights several technical advantages of stablecoins, including improved payment efficiency and reduced transaction costs. By issuing a stablecoin from the government rather than a private entity, Hong Kong can strengthen its position as a global leader in blockchain technology and promote financial innovation, particularly in terms of financial inclusion.
One of the key factors distinguishing HKDG from other stablecoins is its backing by Hong Kong’s substantial foreign exchange reserves. The proposal notes that as of March 2023, Hong Kong’s foreign exchange reserves are projected to reach a staggering US$430 billion (approximately ¥62 trillion). In comparison, the total market capitalization of stablecoins like USDT and USDC amounts to US$120 billion (about 17 trillion yen), highlighting the significant scale of Hong Kong’s reserves.
The proposal emphasizes the reliability of HKDG compared to other stablecoins, particularly citing recent concerns surrounding the stability of USDT, which experienced a drop in value. By challenging the monopoly of US dollar stablecoins, HKDG has the potential to become a mainstream stablecoin in the digital asset and blockchain ecosystem.
However, the proposal acknowledges that HKDG alone may not be sufficient to shake the hegemony of the US dollar. To achieve the goal of “de-dollarization,” the integration of blockchain and digital asset technologies is seen as essential. Although there are hurdles to overcome, such as the need for regulatory development with other countries and robust security measures against hacking, HKDG offers advantages over stablecoins issued by private companies.
Notably, Hong Kong has been actively developing regulations for cryptocurrency exchanges and recently implemented new rules for the industry. While stablecoins were initially restricted from individual investor participation, the regulatory framework will soon permit their inclusion, enabling broader adoption and usage.
In line with this development, First Digital, a Hong Kong-based custody firm, has announced the launch of its US dollar stablecoin, First Digital USD (FDUSD), issued on the BNB smart chain. First Digital aims to establish a global presence while fostering a cooperative relationship with Hong Kong regulators.
As Hong Kong continues to navigate the evolving landscape of cryptocurrencies and blockchain, the proposal to issue HKDG represents a significant step towards leveraging the city’s financial strength and technological expertise. If realized, the government-backed stablecoin could pave the way for innovative financial solutions, challenge the dominance of US dollar stablecoins, and position Hong Kong as a key player in the global digital economy.
- Hong Kong’s Cryptocurrency Development Challenged By AI Focus And Tightened US Regulations, Says Eddie Tam
- Hong Kong Rating Agency HKVAC Unveils Virtual Asset Index, Sparking Controversy
- Hong Kong’s Largest ETF Manager Considers Adding Cryptocurrencies To Investment Offerings
- Hong Kong Takes Steps Towards Becoming A Web3 Hub With New Task Force