4 months ago
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Hong Kong is one of the most crypto-friendly countries in the world, with a comprehensive regulatory framework for the issuance and usage of digital assets.
JD.com, one of China’s largest e-commerce groups, has announced plans to issue the first-ever stablecoin pegged 1:1 to the Hong Kong Dollar (HKD) on a public blockchain. The stablecoins will be backed by highly liquid and credible reserve assets.
The HKD stablecoin will be introduced to the market through the company’s Hong Kong subsidiary, JD Coinlink. The firm was one of the three companies selected by the country’s financial regulator, the Hong Kong Monetary Authority (HKMA), for its stablecoin sandbox program on July 18.
Accessibility and Usage of the HKD Stablecoin
Once the HKD stablecoin goes live, both institutional and retail traders will be able to access the virtual assets on public blockchains such as Binance Smart Chain (BSC), Ethereum, TRON (TRC20), among others. However, the firm has yet to choose its preferred blockchain for the debut.
The company stated that the launch of the HKD stablecoin aims to provide enterprises with “efficient, cost-effective, and secure payment solutions.” Businesses and merchants can use the stablecoin for payments of goods and services.
JD Coinlink clarified on its official website that despite issuing the first HKD stablecoins, it is not a licensed stablecoin issuer. Additionally, the firm noted that it does not endorse or support the digital assets, as they could still be affected by market volatility, as history has shown in the case of TerraUST.
However, it will ensure that the stablecoins comply with existing regulatory requirements in Hong Kong. The firm plans to work with other regulatory authorities outside the jurisdiction to ensure full compliance with existing or future regulations.
Regular Audits
JD Coinlink stated that it will not be the primary custodian of the stablecoin. Once the digital assets are launched, the company will store the funds in independent accounts of licensed financial institutions.
Additionally, the firm plans to conduct various audits and regularly check the reserves to ensure the assets are fully backed 1:1, as demanded by Hong Kong’s new stablecoin regime. The proposed law requires that the value of stablecoins issued in Hong Kong must equal the par value of stablecoins in circulation at all times.
Hong Kong’s Crypto-Friendly Environment
Meanwhile, Hong Kong is one of the most crypto-friendly countries in the world, with a comprehensive regulatory framework for the issuance and usage of digital assets.
Last year, the Asian nation opened its borders to crypto exchanges through its new licensing regime implemented in June 2023. Now, the country is home to companies like HashKey Exchange and OSL Digital Securities Limited (OSL).
On Tuesday, the country welcomed its first Bitcoin futures inverse product launched by CSOP Asset Management, a prominent financial investment company in China.
Hong Kong has also made significant progress in its bid to become a leading financial hub in Asia. In September 2023, the country was recognized as the best-prepared nation for crypto adoption for the second consecutive year. With a crypto readiness rating of 8.36, the country outperformed both the United States and Switzerland.
