What happened?
Bank of China’s Hong Kong unit saw a significant 6.7% increase in shares following the news of its intention to apply for a stablecoin issuer license under the new regulatory framework in Hong Kong. The bank has assembled a dedicated task force to explore the issuance of stablecoins and reportedly has plans to become one of the first applicants for licensing. This follows the recent implementation of the Stablecoin Bill in Hong Kong on August 1, which established a dedicated licensing regime for stablecoin issuers.
Who does this affect?
This development has implications for various parties engaged in the digital currency space. For companies looking to issue stablecoins, especially those linked to the Hong Kong dollar, they must now work to meet the licensing requirements outlined by the Hong Kong Monetary Authority (HKMA). This includes major firms such as JD.com, Ant Group, Standard Chartered, and Circle, who have all expressed their interest in applying. Meanwhile, potential investors need to be aware of the volatile nature of these currencies underscored by the HKMA and Securities and Futures Commission.
Why does this matter?
With the application for a stablecoin issuer license by one of China’s largest banks, it signifies the serious market potential of regulated digital currency, like stablecoins. This move impacts the global digital economy, particularly affecting the USD’s dominance in Asia’s digital settlements. If successful, the Bank of China could introduce a regulated, internationally accessible counterpart to the digital yuan currently controlled by People’s Bank of China. This could potentially create opportunities for testing the cross-border utility of state-backed digital assets.