Hong Kong calls for the release of a competitor to USDT and USDC

The Hong Kong government proposed to issue its own ‘stablecoin’ HKDG, backed by the jurisdiction’s foreign-exchange reserves, to compete with the industry’s giants — USDT and USDC.

The document stresses the importance of such assets as a bridge between traditional finance and the digital economy. Among the advantages of the stablecoin, pegged to the Hong Kong dollar, authorities highlighted:

• increasing financial inclusion;
• improved transaction efficiency;
• lower remittance costs;
• improvement of local payment systems;
• strengthening the jurisdiction’s fintech sector.

The document says that Hong Kong’s foreign-exchange reserves — around $430 billion as of March — exceed the combined market capitalisation of USDT and USDC. The government recognises potential risks, including legal and technical. However, the danger of a state-backed ‘stablecoin’ remains lower than that of assets issued by private companies.

According to the proposal’s authors, HKDG would benefit from government regulation and the transparency afforded by blockchain technology. They also believe that the stablecoin will help Hong Kong take a significant step towards dedollarisation and challenge the dominance of the US dollar in the crypto ecosystem.

In late June, the Hong Kong government announced the creation of a dedicated task force to Web3 development. The main task of the experts is to provide recommendations for improving the industry.