Stablecoins have ignited another round of market fervor.

Recently, it was reported that Ant International is planning to apply for stablecoin licenses in Hong Kong and Singapore. On June 12, Ant International responded that it is accelerating investments and expanding cooperation in global treasury management, committing its AI, blockchain, and stablecoin innovations to large - scale, reliable applications.

"We welcome the passage of the Stablecoin Ordinance Bill by the Hong Kong Legislative Council and will submit our application as soon as the bill takes effect on August 1 and the relevant channels are opened, hoping to contribute more to the development of Hong Kong as a future international financial center," said a representative of Ant International.

In a separate report, Bian Zhuoqun, Vice President of Ant Group and President of Ant Blockchain, revealed in an interview that Ant has already initiated the application process for a Hong Kong stablecoin license and has had multiple rounds of communication with regulators.

On June 12, Hong Kong - listed Ant Financial stocks collectively surged, with Yunfeng Finance experiencing a sharp intra - day increase of 54.24%.

What are stablecoins? How much liquidity space does the Hong Kong dollar stablecoin have? Why are financial institutions and tech companies getting involved? What are the industry pain points?

1:1 Asset Backing

For a long time, the significant price volatility of virtual assets has been widely criticized by the market. In contrast, stablecoins, which are pegged to specific assets, have relatively stable prices and are more likely to accumulate value trust.

According to the Stablecoin Ordinance published in the Gazette by the Government of the Hong Kong Special Administrative Region on May 30 (hereinafter referred to as the "Ordinance"), the definition of stablecoins must meet the criteria of "referring to one of the following to maintain a stable value - a single asset; a group or basket of assets."

Hong Kong has also specifically defined the concept of "specified stablecoins," which refers to stablecoins that refer to one or more official currencies; one or more calculation units specified by the Hong Kong Monetary Authority (hereinafter referred to as the "MA"); one or more forms of storage of economic value specified by the MA; or a combination of the above, to maintain a stable value.

The most familiar stablecoin to the public is Tether (USDT), which is pegged to the U.S. dollar. Tether claims that all USDT tokens are pegged 1:1 to their corresponding fiat currencies (e.g., 1 USDT = 1 USD) and are fully backed by Tether's reserve funds.

To ensure the true stability of stablecoins, jurisdictions such as the United States, the United Kingdom, the European Union, Hong Kong, and Singapore have all set strict requirements for the reserve assets of stablecoins.

The Hong Kong Ordinance stipulates that the market value of the reserve asset portfolio must at all times be at least equal to the face value of the specified stablecoins that have not been redeemed and are still in circulation. Moreover, the licensees' reserve assets must be of high quality, highly liquid, and carry minimal investment risk.

The United States is advancing the Guiding and Establishing National Innovation for U.S. Stablecoin Act (hereinafter referred to as the "Genius Act"), which requires that to issue a payment - type stablecoin, there must be a reserve asset ratio of at least 1:1 to support the issuer's outstanding stablecoins. These reserve assets include U.S. dollar cash, U.S. Treasury bills maturing within 93 days, and similar cash - equivalent instruments.

In line with its 2020 digital finance strategy, the European Union introduced the Markets in Crypto - Assets Regulation (MiCA), with rules regarding asset - referenced tokens and electronic money tokens (both types of stablecoins) taking effect from June 30, 2024.

The Monetary Authority of Singapore released stablecoin regulatory regulations on August 15, 2023. The new regulatory framework applies to any single - currency stablecoin issued in Singapore that is pegged to the Singapore dollar or any G10 (Group of Ten) currency. The reserve assets include cash, cash equivalents, and bonds maturing within three months, all denominated in the pegged currency.

On May 28, 2025, the Financial Conduct Authority (FCA) of the United Kingdom published a consultation paper, suggesting that issuers must ensure that circulating stablecoins are 1:1 supported by a pool of low - risk, liquid assets.

Jeffrey Ding, Chief Analyst at HashKey Group, told Jiemian News that the fundamental purpose of setting a 1:1 peg is to ensure that the stablecoins held by users are backed by real assets, thereby avoiding "empty - running finance" or bank - run risks.

"A 1:1 peg means that each unit of stablecoin corresponds to one unit of equivalent real - world asset. Only then will investors and users have the confidence to hold, use, and even conduct large - scale transactions with such assets, thus avoiding a trust crisis. If the reserves do not fully cover the stablecoins, the 'par - value redemption' promise of the stablecoins will fail. This is not conducive to financial institutions or users quickly exchanging them for fiat currency when needed, thereby affecting their liquidity and settlement functions," Jeffrey Ding emphasized.

Some market analysts believe that the United States' pegging of stablecoins to U.S. Treasury bonds aims to construct a "digital Bretton Woods system."

Deng Jianpeng, Professor of Law at Central University of Finance and Economics and Director of the Research Center for FinTech Law, told Jiemian News, "For the United States, since 90% of stablecoins are currently pegged to the U.S. dollar, its regulatory regulations have self - interested considerations. For example, the requirement for stablecoin reserves to be in U.S. dollar cash or U.S. Treasury bonds means that issuers of dollar - pegged stablecoins will purchase large amounts of U.S. Treasury bonds, becoming major buyers of these bonds."

A Standard Chartered report believes that U.S. legislation on stablecoins is expected to be introduced soon, and the Genius Act is likely to be passed in the summer. This will help increase the total supply of stablecoins from the current $230 billion to $2 trillion by the end of 2028. As stablecoins require reserves, the expected increase in supply will create a new demand for $1.6 trillion in short - term U.S. Treasury bills.

Finding Application Scenarios

A Standard Chartered report points out that the current total scale of stablecoins is about $230 billion, with the largest and second - largest stablecoins being USDT issued by Tether and USDC issued by Circle, holding market shares of 63% and 25%, respectively.

To get a share of the stablecoin market, Hong Kong is accelerating the relevant process. In March 2024, the Hong Kong Monetary Authority launched a "sandbox" for stablecoin issuers, providing a testing environment for institutions intending to issue fiat - backed stablecoins in Hong Kong. On May 21, 2025, the Hong Kong Legislative Council passed the Stablecoin Ordinance Bill to establish a licensing regime for fiat - backed stablecoin issuers in Hong Kong. The Ordinance was gazetted and took effect on May 30, 2025, and will be implemented on August 1, 2025.

For Hong Kong, which is actively striving to become an international virtual asset center, entering the stablecoin market is an expected move.

"Hong Kong is striving to become an international financial center, including an innovation center for WEB3. Issuing Hong Kong dollar stablecoins or regulated stablecoins pegged to other fiat currencies in Hong Kong is of great significance for enhancing Hong Kong's status as an international financial center," said Deng Jianpeng.

However, due to the obvious disadvantage in market share, the development prospects of the Hong Kong dollar stablecoin remain to be observed. "The stablecoin market is still an oligopoly today, with the vast majority of stablecoins pegged to the U.S. dollar, and Tether's stablecoins accounting for the majority of that. Therefore, for a stablecoin pegged to a non - U.S. dollar currency, apart from regulatory approval, the most important thing is whether it can find application scenarios to expand the actual use and market share of non - U.S. dollar stablecoins," said Jeffrey Ding.

"The Hong Kong dollar stablecoin is pegged to the Hong Kong dollar, which has a relatively small market value. In terms of application scenarios, the main use of stablecoins at present is in the field of cryptocurrency investment and trading. Although Hong Kong already has regulated cryptocurrency exchanges and virtual asset ETFs, the overall trading volume is still relatively small. Therefore, in the short term, the Hong Kong dollar stablecoin may maintain a certain volume, but this volume will not be very large," said Deng Jianpeng.

"Of course, application scenarios can break through from virtual currency trading and develop into cross - border payments, because Hong Kong is an important financial center and a hub for service trade. There should be a great demand for cross - border payments," added Deng Jianpeng.

Eugene Zhang, Chief Business Officer of OSL, recently said in a media group interview, "OSL supports companies in making cross - border payments with stablecoins. The advantage is that it can shorten the payment time. If you want to remit money from South America to Hong Kong today, it will take at least 3 - 5 working days through a bank because there are many intermediary banks involved. However, stablecoins can achieve T + 0. In terms of cost, the cost of cross - border remittances with stablecoins is also lower than that of traditional financial institutions."

For stablecoins issued in Hong Kong, choosing cross - border scenarios is also a necessary move.

"I believe that stablecoins must be used for cross - border transactions and not just in Hong Kong; otherwise, their value may not be that significant," said Eugene Zhang.

Of course, connecting on - chain and off - chain cross - border transactions is a long - term project. "This involves not only the permission of regulatory authorities in various countries and regions but also future financial infrastructure construction. As a cryptocurrency trading platform, we will also strive to promote communication among all parties," emphasized Eugene Zhang.

A Throng of Contenders

The stablecoin arena is approaching, and related institutions are accelerating their actions.

In February of this year, Standard Chartered Hong Kong, AN Group, and Hong Kong Telecom reached an agreement to establish a joint venture, which aims to apply for a license from the Hong Kong Monetary Authority under the new regulatory regime and issue a stablecoin pegged to the Hong Kong dollar.

"We are intensifying the relevant preparatory work and will announce more details in due course," said Dominic Maffei, Head of Digital Assets and Fintech at Standard Chartered Hong Kong, recently.

It is worth noting that stablecoins have already created a financial incremental space. On June 5, the digital currency giant Circle went public on the New York Stock Exchange, becoming the "first stablecoin stock." The opening price was $69 per share. As of the close of U.S. markets on June 12, Circle's stock price had risen to $106.54 per share, with a total market value of $23.7 billion.

"I believe the prospects for stablecoins are very promising. In addition to Circle, which has just gone public in the United States, and the stablecoin giant Tether, I believe that companies in China, Europe, South America, and other places will also join in one after another. The future is very promising," said Deng Jianpeng.

Major companies have been quick to respond. As mentioned earlier, Ant International and Ant Blockchain have already made moves in the stablecoin license area.

"In fact, Ant Blockchain participated in the Ensemble regulatory sandbox of the Hong Kong Monetary Authority as early as August last year, mainly to promote the RWA (Real - World Asset Tokenization) project of physical assets such as new energy charging piles. As the parent company of Alipay, Ant Group's application for a Hong Kong stablecoin license this time aims to strengthen its blockchain technology layout and further serve its cross - border payment and fund management business," said Jeffrey Ding.

From a global competition perspective, "Ant International positions itself as a competitor to international payment giants such as Stripe, PayPal, Visa, and MasterCard, all of which have already entered the stablecoin issuance field. As one of the first companies to publicly announce plans to apply for a Hong Kong stablecoin issuance license, Ant International, with its strong fund management capabilities and global fintech background, has a significant first - mover advantage," said Jeffrey Ding.

For comparison, in August 2023, the global payment giant PayPal announced the launch of a U.S. dollar - pegged stablecoin called PayPal USD (PYUSD), which is 100% backed by U.S. dollar deposits, short - term U.S. Treasury bills, and similar cash - equivalent instruments. It is issued by the U.S. fintech company Paxos Trust Company.

According to PayPal, customers can convert PYUSD between PayPal and compatible external wallets; use PYUSD to send peer - to - peer payments; select PYUSD to pay at checkout; and exchange any cryptocurrency supported by PayPal with PYUSD.

In fact, while rushing to gain a first - mover advantage, there is also a consideration of asset layout. "After participating in the issuance of stablecoins, institutions can obtain the fiat currency paid by stablecoin holders at almost zero cost. Institutions can then use this to purchase low - risk investment products, such as U.S. Treasury bonds, which will generate returns. The higher the issuance volume of stablecoins and the larger the base, the more significant the investment returns may be," said Deng Jianpeng.

Many Pain Points Remain

"There are currently few laws and regulatory rules targeting stablecoins. The popular stablecoins on the market actually all have compliance and financial risks," emphasized Deng Jianpeng.

This includes the issue of asset stability. As mentioned above, stablecoins will require 100% pegged reserve assets. To what extent can this measure ensure the safety of stablecoin assets?

Jeffrey Ding believes that a 1:1 real - asset peg enhances asset security but cannot completely eliminate risks. High - security assets (such as short - term U.S. Treasury bills, cash, and bank deposits) can be quickly liquidated in a short period of time, greatly reducing liquidity risks. However, if the reserves are volatile assets or low - liquidity assets (such as commercial papers, tokenized securities), the risks will rise significantly. That is why Hong Kong and the United States stipulate that reserve assets must be highly liquid, including cash and short - term U.S. Treasury bills.

Jeffrey Ding mentioned that both Hong Kong and the United States require reserve assets to be held by independent, regulated custodians and to be completely segregated from the issuer's own funds. This can prevent user assets from being damaged due to the issuer's bankruptcy or misappropriation of funds. They also undergo third - party accounting audits or on - chain verifiable mechanisms to enhance transparency and public confidence, preventing false endorsements or information asymmetry.

One risk is that if the pegged reserve assets encounter problems, the stablecoins will also be affected. In March 2023, Silicon Valley Bank in the United States announced its bankruptcy due to a liquidity crisis. At that time, Circle had $3.3 billion of its $40 billion USDC reserves in Silicon Valley Bank. This caused the price of USDC to plummet to around $0.87, severely deviating from its pegged price.

On the application side, there are also compliance issues. "In the field of cross - border payments, stablecoins have obvious advantages, whether in terms of payment costs or payment efficiency, over traditional financial institutions. However, the challenge lies in compliance. The issued stablecoins and the corresponding reserve cash or other equivalents must be strictly pegged. If not, it is equivalent to over - issuing currency or fraud. This may be a major challenge for future regulators to pay attention to," said Deng Jianpeng.

"Another challenge is anti - money laundering. Stablecoins may be exploited by hackers or used for other illegal purposes, which is also a significant challenge," said Deng Jianpeng.

It is worth pointing out that an industry consensus is that the high compliance costs are also a major problem that virtual asset participants must overcome.

"Finally, for other countries using non - U.S. dollar or non - mainstream fiat currencies, or for those countries whose national fiat currencies have already lost credibility or are suffering from severe inflation, since stablecoins are very accessible and do not require a bank account - as long as one has internet access - this may lead to these countries dumping their own currencies in favor of U.S. dollar - pegged stablecoins. This will pose a significant challenge to the financial sovereignty, currency sovereignty, and financial security of these countries," emphasized Deng Jianpeng.