Written by: Xiao Za Legal Team
In recent years, stablecoins have moved from a niche in the cryptocurrency asset sector to the forefront of global financial infrastructure development. On May 21, the Hong Kong Legislative Council passed the "Stablecoin Regulation Bill," and on June 17, the U.S. Senate passed the "Guidance and Establishment of a National Innovation Act for U.S. Stablecoins" (referred to as the "Genius Act"). Stablecoins have become a hot topic in the financial world.
A number of forward-looking companies have begun exploring the intersection of "compliant digital finance" and "stablecoin universal payments." Companies like JD Finance and Yuanbi Technology have started to explore on-chain payments and stablecoin scenarios, while Standard Chartered Bank, Animoca Brands, and HKT have jointly launched a compliant stablecoin payment network in Hong Kong, providing an important paradigm for the future transformation of the financial industry. Today, I will use the cases of these three "pioneers" as a starting point to discuss the challenges and responses that traditional financial institutions in mainland China may encounter in the wave of stablecoins, and how to fully leverage their latecomer advantages to catch up with this trend.
01 Current Basic Situation of Three Groups (Companies) in Stablecoin Business Construction
JD Coin Chain Technology focuses on cross-border payments and supply chain finance, with clear stablecoin application scenarios closely integrated with payment services. According to statements from JD Coin Chain Technology CEO Liu Peng, JD stablecoin is a stablecoin based on a public chain, pegged 1:1 to fiat currencies such as the Hong Kong Dollar (HKD) or the U.S. Dollar (USD). The first phase is tentatively set to issue stablecoins pegged to HKD and USD, with specific circumstances adjusted based on regulatory and market demand. It has not yet been officially issued and has entered the second phase of sandbox testing, primarily targeting retail and institutional users with mobile and PC application products. The testing scenarios mainly include cross-border payments, investment transactions, and retail payments. The aim is to enhance the efficiency of fund circulation between enterprises, enabling global currency exchange through stablecoin licenses and reducing the cost of cross-border payments.
Yuanbi Technology plans to issue a Hong Kong Dollar stablecoin (HKDR), pegged 1:1 to HKD, using Ethereum as the underlying blockchain. It will adopt a smart contract mechanism for automatic issuance and redemption, ensuring that each stablecoin is backed by sufficient fiat currency reserves. Users can exchange HKDR for fiat currency through compliant exchanges or payment platforms, achieving efficient fund circulation. The reserve assets of HKDR consist of highly liquid assets held in independent accounts at licensed financial institutions, with transparency ensured through regular third-party audits, fully complying with Hong Kong's "Stablecoin Regulation" requirements. The characteristics of Yuanbi Technology's stablecoin construction include flexible compliance structure design and support for RWA scenario implementation. The goal is to create a regulatory-compliant, scalable stablecoin system to serve cross-border settlement, asset trading, and the digital transformation needs of financial institutions.
Standard Chartered Bank, Animoca Brands, and HKT have established a joint venture to participate in the Hong Kong Monetary Authority's "Stablecoin Issuer Sandbox," jointly promoting a compliant stablecoin pegged to the Hong Kong Dollar. This project combines the strengths of the three parties: Standard Chartered provides bank-level fund custody and risk control, leveraging its strong financial strength and rich operational experience; Animoca Brands contributes Web3 technology (especially in the blockchain field); and HKT is responsible for leveraging its advantages in communication resources to promote the integration of mobile wallets and payment scenarios, aiming to enhance the efficiency of cross-border and local payments and achieve widespread application of stablecoins in the Greater Bay Area and Hong Kong's financial ecosystem.
02 Impact of the Stablecoin Wave on Traditional Financial Institutions in Mainland China
The financial model of stablecoins differs significantly from that of traditional finance, possessing a series of characteristics that traditional financial models do not have, which will inevitably bring a significant impact on the business of traditional financial institutions in mainland China.
Firstly, stablecoins, with their on-chain real-time settlement, low cost, and high efficiency, are challenging the traditional payment system dominated by banks, weakening their monopoly position in cross-border payments, clearing, and intermediary services.
Secondly, the blockchain technology that stablecoins rely on has capabilities such as asset programmability and automatic execution of smart contracts, promoting the evolution of financial assets towards tokenization, impacting the traditional account system and custody model of banks.
Finally, the widespread application of stablecoins is often accompanied by the rise of decentralized architectures and new financial ecosystems, giving birth to a large number of "non-bank institutions" as financial innovation entities, putting banks at risk of being marginalized. Especially in offshore RMB markets such as Hong Kong, Macau, and Southeast Asia, stablecoins are expected to become an important supplementary tool for the internationalization of the RMB.
03 Realistic Difficulties for Traditional Financial Institutions in Mainland China to Catch Up with the Stablecoin Wave
Even if they recognize the value and trend of stablecoins, traditional financial institutions in mainland China still face many practical obstacles in "catching up with the trend," mainly stemming from the immaturity of relevant government regulations and normative systems:
On one hand, the People's Bank of China has maintained a cautious and even "closed" regulatory attitude towards stablecoins and crypto assets. Although DC/EP (Digital Currency/Electronic Payment) has made progress, there is still a lack of clear compliance pathways for market-oriented pegged stablecoins. This makes it difficult for banks to participate directly in the design, issuance, and trading of stablecoins. The flourishing development of stablecoin businesses in places like Hong Kong and Singapore is primarily due to the regulatory "sandbox" mechanism providing a protective and experimental environment for fintech trials, while the mainland financial regulatory system has yet to establish a similar mechanism, leading to high innovation costs and potentially further compliance risks.
On the other hand, the greatest value of stablecoins lies in "cross-border payments" and "on-chain asset circulation," but there are still significant restrictions on capital flows under the capital account in mainland China, with strict regulations on the flow of funds, making it difficult for many stablecoin models to achieve "closed-loop circulation" locally.
04 Transformation Ideas and Suggestions for Traditional Financial Institutions in Mainland China
The wave of stablecoins cannot be avoided, and the key to catching up with this trend lies in clarifying one's positioning and actively laying out strategies. The Xiao Za team believes that in the current wave and impact of stablecoins, traditional institutions in mainland China can adopt the following transformation strategies:
(1) Start from B-end industrial payments to reconstruct the enterprise clearing and settlement network
As demonstrated by JD Finance, by introducing quasi-stablecoin tools into industrial chain payments, it is possible to bypass the regulatory pressure on the C-end (consumer end) and form efficiency advantages on the B-end (merchant end), while accumulating experience for the subsequent landing of stablecoin business on the C-end after regulatory relaxation. The industrial finance scenario can be used as a breakthrough point, creating stablecoins as "accounting units" under a consortium blockchain architecture to support scenarios such as supply chain finance, warehousing procurement, and inter-enterprise payment terms, gradually transitioning to more complex on-chain asset services as the timing matures.
(2) Strengthen collaboration with technology companies to fully leverage technological empowerment
In an interview with the 21st Century Business Herald, Yuanbi Technology CEO Liu Yu stated that the core management team of Yuanbi Technology integrates members from various backgrounds, including those from major internet finance companies and traditional banks, which can provide experience for compliance and risk control. Many core members also have experience in Web3, as stablecoins connect the fiat currency world with the digital currency world, so it is essential to be able to "speak the language of both worlds." As practice shows, traditional financial institutions can collaborate with stablecoin technology companies through investment, alliances, and SPV cooperation to participate in pilot projects with lower risks, empowering stablecoin business through technology and gradually mastering technological initiative.
(3) Actively conduct pilot projects in Hong Kong and Macau to further promote cross-border cooperation
Referring to the paths of international banks like Standard Chartered, mainland institutions can establish subsidiaries or joint laboratories in Hong Kong, advancing stablecoin payments, settlements, and asset tokenization in the Hong Kong and Macau "regulatory sandbox," and then use the name of serving foreign capital to benefit mainland businesses. They can fully utilize the financial opening policies of Hong Kong and Macau, connecting with companies like Standard Chartered and Yuanbi Technology that have infrastructure, promoting tokenized deposits and stablecoin payment pilots, and learning from the advanced experiences of relevant enterprises to prepare for the development of mainland businesses.
In summary, despite numerous challenges, mainland financial institutions still have pathways to "catch up with the trend." The key lies in recognizing their positioning, advancing step by step, actively cooperating, and quickly piloting. However, it is important to note that this must be done within a compliant framework and not violate the existing regulatory system in mainland China, or else the costs will outweigh the benefits.
05 Final Thoughts
If the past financial system was a "water management system," primarily focused on liquidity, then the stablecoin system resembles an "electric power system": efficient, programmable, and capable of cross-border reach. Traditional financial institutions in mainland China cannot and should not miss this infrastructure revolution in the financial sector. JD Finance, Yuanbi Technology, and the collaboration among the three parties in Hong Kong have already provided practical references for mainland financial institutions. The wave of stablecoins has arrived, and the key is: do we have the courage to fundamentally reconstruct the underlying mechanisms, rather than merely becoming a "bank on the blockchain"? In addition to courage, we must also maintain a clear mind, ensuring that everything is legal and compliant as a prerequisite.
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