Ant Group Suspends Stablecoin Plan: What Will Happen to Hong Kong's Stablecoin Policy?

On August 1st this year, Hong Kong officially implemented the “Stablecoin Ordinance.” According to publicly available data, as of September 30, a total of 36 institutions have submitted applications, and the market expects the first batch of license lists to be announced in the first quarter of next year.

However, the Financial Times reported yesterday, citing sources, that multiple mainland companies, including Ant Group and JD.com, have paused their stablecoin plans after receiving instructions from regulatory bodies such as the People's Bank of China and the National Internet Information Office stating that they “must not proceed.” This move reflects the regulatory concerns regarding the development of stablecoin businesses by private enterprises.

After the news broke, some friends asked me for my opinion, worried that Hong Kong's stablecoin policy might be hindered as a result. Coincidentally, I have been closely following the recent policy developments in Hong Kong and am quite interested in this, so I delved into the details of the event to analyze it and give everyone some reassurance.

The Hong Kong stablecoin policy is expected to remain largely unaffected.

The complete report cited warnings from central bank officials: if technology companies or brokerages issue any form of “currency”, it may undermine the monetary sovereignty of the central bank, and privately issued stablecoins will be seen as a challenge to the central bank's dominant digital renminbi (e-CNY) project.

The key point is clear - these halted stablecoin projects are all issued with a focus on the renminbi or offshore renminbi pegging, which conflicts with the People's Bank of China's long-term strategy for digital renminbi. The digital renminbi pilot has been implemented for several years, and I have also registered and used it, but the currently supported scenarios are still limited.

This regulatory action by the People's Bank is essentially due to the high overlap in business scenarios between the stablecoins based on the Renminbi (both onshore and offshore) and the digital Renminbi—both core applications are to replace cash (M0) for cross-border business settlements. In other words, the regulation only blocks the development path of CNY stablecoins in Hong Kong, without affecting the applications of other types of stablecoins.

What kind of stablecoin is more likely to be approved in Hong Kong?

This needs to be understood in conjunction with the Hong Kong RWA article I wrote earlier.

Currently, the application prospects for USD, bonds, and fund-type stablecoins appear the most optimistic. In particular, interest-bearing asset classes, such as US Treasury bonds and USD money market funds, are expected to have a higher approval rate compared to other currency assets.

This judgment is based on the issuance mechanism of the Hong Kong dollar. There are currently three note-issuing banks in Hong Kong: HSBC, Standard Chartered Bank, and Bank of China (Hong Kong). When these banks issue Hong Kong dollar banknotes, they must pay an equivalent amount in US dollars to the Hong Kong Monetary Authority at a fixed exchange rate and can only print banknotes after obtaining a “Certificate of Indebtedness.” This means that each Hong Kong dollar banknote is backed by a 100% US dollar reserve.

Hong Kong has a naturally higher acceptance of USD-denominated assets, and the relevant pathways are mature and well-validated. I expect the approval rate for such stablecoins to be greater and they may receive approval sooner.

The Hong Kong financial system may move towards a dual-track system.

From a historical perspective, Hong Kong's mechanism of issuing the Hong Kong dollar based on the US dollar originates from its positioning as an international financial center, where outward-oriented trade and financial transactions are mostly denominated and settled in US dollars. However, at this time point in 2025, the financial and trade friction between China and the United States is intensifying, and the People's Bank of China halting the issuance of the renminbi stablecoin may contain deeper strategic considerations.

In my personal judgment, the greater value of the digital renminbi lies in promoting the internationalization of the renminbi, and Hong Kong is very likely to become an important promotion window. In the future, the issuance mechanism of the Hong Kong dollar may present a new pattern similar to a “dual-track system”—gradually increasing the proportion of assets such as digital renminbi while maintaining the existing 100% US dollar reserve, forming a more diversified reserve structure.