The financial world is rapidly evolving, and digital assets are no longer a fringe concept—they’re becoming central to global finance. A recent development has reignited interest in the role of stablecoins, particularly those backed by the Chinese yuan (RMB), within Hong Kong’s financial ecosystem. On June 25, Guotai Junan International (01788.HK), a Hong Kong-listed securities firm, announced that its wholly owned subsidiary, Guotai Junan Securities (Hong Kong) Limited, had successfully upgraded its Type 1 regulated activity license from the Securities and Futures Commission (SFC). This upgrade allows the firm to provide virtual asset trading services through a licensed platform, including offering advice and issuing or distributing virtual asset-related products such as OTC derivatives.
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This regulatory milestone makes Guotai Junan International the first mainland-affiliated securities firm in Hong Kong authorized to offer comprehensive virtual asset services. Investors responded swiftly: the stock surged 198.39% on the day, closing at HK$3.70 per share with a trading volume of HK$16.39 billion, adding HK$23.5 billion to its market capitalization.
Regulatory Momentum Fuels Market Confidence
The timing of this development is no coincidence. On May 21, Hong Kong passed the Stablecoin Ordinance, set to take effect on August 1, 2025. Around the same time, the U.S. Senate advanced the Lummis-Gillibrand Payment Stablecoin Act, signaling a growing global consensus on regulating stablecoins. Both jurisdictions emphasize core principles:
- Stablecoins must be pegged to legal tender.
- Issuers must hold sufficient high-liquidity reserves for full redemption.
- A licensing regime ensures only qualified institutions can issue stablecoins.
These frameworks effectively transform compliant stablecoins into digital extensions—or "shadow currencies"—of their underlying fiat money. Just as the Hong Kong dollar operates under a currency board system linked to the U.S. dollar, stablecoins represent a new form of digital parity, anchored via blockchain technology rather than traditional banking infrastructure.
Classifying Modern Money: Where Do Stablecoins Fit?
To understand the strategic value of RMB-backed stablecoins, it helps to categorize modern monetary forms:
- Natural money: e.g., gold
- Supranational currencies: e.g., IMF Special Drawing Rights (SDR)
- Major sovereign currencies: e.g., USD, EUR, JPY, GBP
- Regional currencies: e.g., the euro
- Local legal tender: e.g., HKD, MOP
- Fiat-collateralized stablecoins: e.g., USDT, USDC
- Minor national currencies
The more stablecoins tied to a given fiat currency, the broader its digital monetary influence—its “sphere of financial reach.” Today, USD-backed stablecoins dominate, accounting for roughly 98% of all fiat-collateralized stablecoin market capitalization. This creates a first-mover advantage driven by network effects.
But momentum doesn’t guarantee permanence. As geopolitical dynamics shift and digital trade expands, opportunities emerge for alternative digital currencies—especially those aligned with rising economic powers like China.
Why RMB Stablecoins Make Strategic Sense in Hong Kong
Hong Kong is uniquely positioned to become the launchpad for offshore RMB stablecoin innovation. Here’s why:
1. Clear Regulatory Pathway
With the Stablecoin Ordinance coming into force in August 2025, Hong Kong now offers a transparent legal framework for issuing and operating RMB-backed stablecoins. This clarity reduces uncertainty for financial institutions and fintech innovators alike.
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2. Deep Offshore RMB Liquidity
As the world’s largest offshore RMB hub—with over RMB 1 trillion in deposits—Hong Kong already possesses the liquidity foundation needed to support large-scale stablecoin issuance. The existing demand for cross-border trade settlement creates a ready-made use case.
3. Building Alternative Payment Rails
Traditional cross-border payment systems like SWIFT face criticism for being slow, costly, and vulnerable to geopolitical manipulation. As noted by People’s Bank of China Governor Pan Gongsheng at the Lujiazui Forum, legacy systems lag behind digital innovations in efficiency and accessibility.
A Hong Kong-based RMB stablecoin could integrate with initiatives like the Cross-Border Payment Connect system to create faster, cheaper, and more resilient transaction channels—bypassing traditional intermediaries while remaining compliant.
4. Strategic Differentiation from Dollar Dominance
While dollar-pegged stablecoins lead today, they are not immune to competition. By focusing initially on high-volume corridors—such as Greater Bay Area commerce and Belt and Road Initiative trade—RMB stablecoins can carve out niche utility before scaling globally.
5. Complementarity with Central Bank Digital Currencies (CBDCs)
The development of offshore RMB stablecoins does not conflict with ongoing CBDC projects like mBridge, a multi-central bank initiative involving China, Thailand, UAE, and Hong Kong. While CBDCs operate under sovereign control and direct central bank oversight, private-sector stablecoins serve different market needs—offering flexibility and innovation at the application layer.
In short: CBDCs provide rails; stablecoins provide vehicles.
Frequently Asked Questions (FAQ)
Q: What is an RMB-backed stablecoin?
A: It's a digital token pegged 1:1 to the Chinese yuan, backed by liquid reserves like cash or short-term government bonds, designed for fast, secure digital transactions.
Q: How is it different from China’s digital yuan (e-CNY)?
A: The e-CNY is a central bank digital currency issued directly by the PBOC. An RMB stablecoin would typically be issued by private financial institutions under strict regulatory oversight but operates on public or semi-public blockchains.
Q: Is Hong Kong the best place to launch RMB stablecoins?
A: Yes. Its status as an international financial center, deep capital markets, rule of law, and strong ties to both mainland China and global finance make it ideal.
Q: Could RMB stablecoins challenge USDT or USDC?
A: Not immediately in global dominance, but they can gain traction in Asia-Pacific trade networks and among Chinese multinational enterprises seeking efficient offshore settlement tools.
Q: Are these stablecoins safe?
A: Under Hong Kong’s new regulatory regime, only licensed issuers with audited reserves will be allowed—significantly improving transparency and consumer protection.
Q: Will this help RMB internationalization?
A: Absolutely. By expanding the digital footprint of the RMB in trade and finance, stablecoins enhance usability beyond borders without challenging capital controls directly.
Final Thoughts: Beyond Technology—A Geopolitical Play
The race for stablecoin leadership isn't just about code or capital—it's about currency influence in the digital age. While technological adoption matters, long-term success hinges on economic strength, institutional credibility, and strategic alignment.
RMB-backed stablecoins aren’t meant to replace the dollar overnight. But by starting in Hong Kong—a trusted financial gateway—with clear regulation, deep liquidity, and growing demand for efficient cross-border solutions—they can lay the groundwork for a more multipolar digital monetary system.
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The future of money isn’t just digital—it’s strategic. And Hong Kong may soon play a pivotal role in shaping that future for the RMB.