The Hong Kong "Stablecoin Regulation" will take effect on August 1st. The Secretary for Financial Services and the Treasury, Christopher Hui, stated on July 7th that the Hong Kong Monetary Authority is currently consulting the market on the implementation of the regulation's guidelines, which will be announced in July. The goal is to issue stablecoin licenses within this year, and the number of licenses granted will be in single digits. This initiative has multiple important implications:

• Establish a robust regulatory environment: The "Stablecoin Regulation" upholds the principle of "same activities, same risks, same regulations," focusing on risk-based approaches. The implementation of this regulation fills the regulatory gap for fiat-backed stablecoins, providing a stable foundation for Hong Kong's virtual asset market, promoting sustainable development in the industry, protecting user rights, and consolidating Hong Kong's status as an international financial center.

• Facilitate the internationalization of the Renminbi: With the implementation of regulations, compliant stablecoins pegged to the Hong Kong dollar or Renminbi are expected to gain wider usage. Hong Kong can leverage its position as an international financial hub to promote Renminbi stablecoins as a reliable alternative to US dollar stablecoins, thereby further expanding the influence of the Renminbi in the global digital currency system.

• Expand corporate financing channels: Stablecoins can open new paths for corporate financing, especially providing more efficient capital solutions for cross-border trade, small and medium-sized enterprises, and emerging market companies. For example, companies can issue bonds linked to stablecoins to save on foreign exchange losses and fees incurred from traditional foreign exchange conversions and cross-border settlements.

• Promote the development of the digital asset industry: Hong Kong has become the world's first international financial center to establish a dedicated regulatory system for fiat-backed stablecoins. The implementation of the "Stablecoin Ordinance" has strategic significance in attracting global fintech companies to establish a presence in Hong Kong and promoting the integration and development of virtual assets with traditional finance.

• Enhancing payment efficiency: Stablecoins are seen as an alternative to traditional financial systems, with the potential to reshape payment and capital market activities. For instance, in cross-border payments, stablecoins can achieve settlement in seconds, with cost reductions of up to 90%, significantly outperforming traditional wire transfers.