Written by: Xiao Za Legal Team

Recently, thanks to the release of positive regulatory signals, major companies have announced their plans to enter the "stablecoin" sector. Overnight, this concept, which was once closely tied to cryptocurrencies and often associated with money laundering and cross-border cybercrime, has rapidly become a new "trend" in both the crypto industry and traditional finance, attracting widespread interest.

Coincidentally, on June 22, 2025, the Cross-Border Payment System officially launched, driven by the People's Bank of China and the Hong Kong Monetary Authority. The institutional barriers between Hong Kong and mainland China have collapsed, and the convenience of instant small transfers has allowed the public to truly experience the benefits. Since the Cross-Border Payment System is so convenient, do we still need stablecoins?

Today, the Xiao Za team will discuss in detail the similarities and differences between "stablecoins" and traditional financial payment tools, as well as whether they are in a "competitive" relationship.

01 Clarifying the Two Concepts

First, what is a stablecoin? In the simplest terms, a stablecoin is a type of cryptocurrency issued by a specific organization or individual, backed by a national fiat currency as its underlying asset (value basis). Technically, it is not much different from cryptocurrencies like BTC or ETH, but it excels in price transparency, stability, and lack of volatility, making it a "general equivalent" in the crypto world that can serve as a payment tool or a measure of value. Therefore, partners can actually view stablecoins as a special type of non-legal "currency."

Next, what is the Cross-Border Payment System? Similarly, in simple terms, the Cross-Border Payment System refers to the "combination" of the mainland's Internet Banking Payment System (IBPS) and Hong Kong's Faster Payment System (FPS). By connecting the two, it can solve the problem of cross-regional payments at the lowest cost. For example, currently, partners can use the Cross-Border Payment System to make small transfers directly without converting RMB to HKD. Remittances that used to take half a day to arrive can now be completed in seconds, significantly reducing transaction and payment costs.

Currently, according to the Hong Kong Securities and Futures Commission, stablecoins are still in the testing phase, and no issuing entity has successfully exited the sandbox to go global. In other words, compliant and regulated stablecoins are still in the early stages of development. In contrast, the Cross-Border Payment System has already brought real convenience to the public, and many partners can use it recently.

02 Stablecoins vs. Cross-Border Payment System: Are They "Competitors"?

This is one of the most frequently asked questions by partners recently. Although both are payment methods and tools in practical terms, they have fundamentally different essences, and their future development and application scenarios also differ significantly.

From an essential attribute perspective, as mentioned earlier, stablecoins are essentially a "general equivalent," a special type of non-legal "currency"; while the Cross-Border Payment System is a convenient payment system developed based on the existing fiat currency system for cross-regional (mainland China and Hong Kong) transactions. Therefore, simply put, they are not "competitors," but there is indeed some overlap in their application scenarios.

Currently, the main application scenarios for the Cross-Border Payment System are as follows:

1. Domestic residents can remit funds to Hong Kong bank accounts, choosing to remit in RMB and receive in RMB or HKD, commonly known as "southbound convenient remittance services";

2. Hong Kong residents can remit funds to mainland bank accounts through "northbound convenient remittance services," choosing to initiate in HKD or RMB and receive in RMB;

3. Individuals and legal entities can choose bilateral local currency or bilateral RMB remittances, commonly known as "two-way cross-border RMB payment services," such as when Mr. Wang needs to pay tuition for his son studying at the University of Hong Kong.

The Xiao Za team specifically reminds that there are currently limits on remittance amounts, and only small remittances can be processed. For remittances from Hong Kong to the mainland, the limit is HKD 10,000 per person per day at each bank, and HKD 200,000 per person per year at each bank; for remittances from the mainland to Hong Kong, it is calculated based on the current personal annual foreign exchange purchase limit of USD 50,000 (which is subject to foreign exchange control limits).

As for stablecoins, there is not much information disclosed about the three entities currently in the Hong Kong regulatory sandbox, and their application scenarios vary. For example, the collaboration between Animoca Brands, Standard Chartered Bank, and Hong Kong Telecom has entered the later stage of sandbox testing, primarily issuing stablecoins pegged to the HKD.

03 Latest News and Policy Judgments on Hong Kong Stablecoin License Applications

Since the "Stablecoin Ordinance" in the Hong Kong Special Administrative Region was implemented and will take effect on August 1, the Xiao Za team has received numerous inquiries about how to apply for a license. In fact, partners need not panic; although the Hong Kong Monetary Authority will start accepting license applications after August 1, this license is not first-come, first-served, but rather awarded to those who are "reliable."

First, the number of licenses to be issued is extremely limited, possibly only in single digits. The Monetary Authority has provided a clear regulatory approach and positioning: stablecoins are not tools for investment or speculation, but one of the payment tools utilizing blockchain technology (positioned as financial infrastructure), and they do not have appreciation potential. In other words, whether a license can be granted depends on whether the applicant has the capability and intention for long-term large-scale investment in infrastructure construction and whether they can provide sufficiently reliable application scenarios to impress the Monetary Authority.

Second, the three entities that have entered the sandbox are undoubtedly ahead, but this does not mean that entering the "sandbox" in the future is a prerequisite for obtaining a license, nor does it mean that participating institutions that have entered the "sandbox" will necessarily receive a license.

In summary, the opportunities presented by this era may be limited, and the Xiao Za team does not recommend rushing in without adequate preparation; sharpening the axe does not hinder the work of cutting wood. The issuance of stablecoin licenses will inevitably undergo a long assessment period, and as long as one is sufficiently "reliable," it is not impossible to be a latecomer who arrives first.

04 In Conclusion

Many partners are asking what specific conditions need to be met to apply for a stablecoin license and what the specific processes are. In fact, the Monetary Authority has not provided a clear guideline at this time. According to the Xiao Za team, the guiding documents are still in the consultation period, and partners should pay close attention.

So, if one wants to prepare in advance at this stage, is there a reference standard? Of course, there is. The regulatory authorities in Hong Kong have clarified that the framework for stablecoin regulation in Hong Kong is based on the section regarding stablecoins in the "Global Crypto Asset Activity Regulatory Framework" published by the Financial Stability Board (FSB) under the G20 in 2023. Therefore, if partners wish to prepare in advance, it is recommended to refer to this standard to advance specific compliance work.

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