On August 1st of this year, Hong Kong officially implemented the Stablecoin Ordinance. Public data shows that as of September 30th, 36 institutions had submitted applications, and the market expects the first batch of licenses to be announced in the first quarter of next year. However, yesterday, the Financial Times reported, citing sources familiar with the matter, that several mainland Chinese companies, including Ant and JD.com, have suspended their stablecoin plans after receiving directives from regulators such as the People's Bank of China and the Cyberspace Administration of China not to proceed. This move reflects continued regulatory concerns about private companies developing stablecoins. After the news broke, some friends asked me for my opinion, expressing concern about whether Hong Kong's stablecoin policy would be hindered by this. As I've been following Hong Kong's policy developments recently, I've become quite interested in this matter and have delved into the details of the incident. Here's some analysis to reassure everyone. Hong Kong's stablecoin policy is not expected to be substantially affected The full report quoted a warning from a central bank official: any form of "currency" issued by technology companies or securities firms could undermine the central bank's monetary sovereignty, and the private issuance of stablecoins would be seen as a challenge to the central bank-led digital RMB (e-CNY) project. The key point is clear: these halted stablecoin projects were all pegged to the RMB or offshore RMB, which conflicts with the People's Bank of China's multi-year strategy for the digital RMB. The digital RMB pilot program has been underway for several years, and I've registered to use it, but its current support scenarios remain limited. The People's Bank of China's regulatory action is essentially due to the high overlap in business scenarios between RMB-based stablecoins (both onshore and offshore) and the digital RMB. The core application of both is to replace cash (M0) for cross-border business settlement. In other words, the regulation only blocks the development of the CNY stablecoin in Hong Kong and does not affect the application 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 my previous article on Hong Kong RWA (readers who have not read it can refer to: 65. In-depth Analysis of Hong Kong RWA: FAQ Answers from the Front Line). Currently, the application prospects for stablecoins based on the US dollar, bonds, and funds are the most optimistic. Interest-bearing assets, such as US Treasury bonds and US dollar money market funds, are particularly promising, as they are expected to have a higher approval rate than other monetary assets. This assessment is based on the issuance mechanism of the Hong Kong dollar. Hong Kong currently has three note-issuing banks: HSBC, Standard Chartered Bank, and Bank of China (Hong Kong). When issuing Hong Kong dollar banknotes, these banks must pay the equivalent amount of US dollars to the Hong Kong Monetary Authority at a fixed exchange rate and obtain a "Certificate of Indebtedness" before they can print the notes. This means that every Hong Kong dollar note is 100% backed by US dollar reserves. Hong Kong's acceptance of US dollar-related assets is naturally high, and the relevant paths are mature and fully verified. I expect that the approval rate of such stablecoins will be higher or they may be approved earlier. Hong Kong's financial system may move towards a dual-track system Historically, Hong Kong's issuance of Hong Kong dollars against the US dollar stems from its position as an international financial center, with outward-oriented trade and financial transactions largely denominated and settled in US dollars. However, with Sino-US financial and trade frictions intensifying in 2025, the People's Bank of China's decision to halt the issuance of the RMB stablecoin may reflect deeper strategic considerations. In my opinion, the greater value of the digital RMB lies in promoting its internationalization, and Hong Kong is very likely to become an important platform for its promotion. The future Hong Kong dollar issuance mechanism may adopt a new "dual-track" structure—maintaining the existing 100% US dollar reserve while gradually increasing the proportion of assets such as the digital RMB, forming a more diversified reserve structure.On August 1st of this year, Hong Kong officially implemented the Stablecoin Ordinance. Public data shows that as of September 30th, 36 institutions had submitted applications, and the market expects the first batch of licenses to be announced in the first quarter of next year. However, yesterday, the Financial Times reported, citing sources familiar with the matter, that several mainland Chinese companies, including Ant and JD.com, have suspended their stablecoin plans after receiving directives from regulators such as the People's Bank of China and the Cyberspace Administration of China not to proceed. This move reflects continued regulatory concerns about private companies developing stablecoins. After the news broke, some friends asked me for my opinion, expressing concern about whether Hong Kong's stablecoin policy would be hindered by this. As I've been following Hong Kong's policy developments recently, I've become quite interested in this matter and have delved into the details of the incident. Here's some analysis to reassure everyone. Hong Kong's stablecoin policy is not expected to be substantially affected The full report quoted a warning from a central bank official: any form of "currency" issued by technology companies or securities firms could undermine the central bank's monetary sovereignty, and the private issuance of stablecoins would be seen as a challenge to the central bank-led digital RMB (e-CNY) project. The key point is clear: these halted stablecoin projects were all pegged to the RMB or offshore RMB, which conflicts with the People's Bank of China's multi-year strategy for the digital RMB. The digital RMB pilot program has been underway for several years, and I've registered to use it, but its current support scenarios remain limited. The People's Bank of China's regulatory action is essentially due to the high overlap in business scenarios between RMB-based stablecoins (both onshore and offshore) and the digital RMB. The core application of both is to replace cash (M0) for cross-border business settlement. In other words, the regulation only blocks the development of the CNY stablecoin in Hong Kong and does not affect the application 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 my previous article on Hong Kong RWA (readers who have not read it can refer to: 65. In-depth Analysis of Hong Kong RWA: FAQ Answers from the Front Line). Currently, the application prospects for stablecoins based on the US dollar, bonds, and funds are the most optimistic. Interest-bearing assets, such as US Treasury bonds and US dollar money market funds, are particularly promising, as they are expected to have a higher approval rate than other monetary assets. This assessment is based on the issuance mechanism of the Hong Kong dollar. Hong Kong currently has three note-issuing banks: HSBC, Standard Chartered Bank, and Bank of China (Hong Kong). When issuing Hong Kong dollar banknotes, these banks must pay the equivalent amount of US dollars to the Hong Kong Monetary Authority at a fixed exchange rate and obtain a "Certificate of Indebtedness" before they can print the notes. This means that every Hong Kong dollar note is 100% backed by US dollar reserves. Hong Kong's acceptance of US dollar-related assets is naturally high, and the relevant paths are mature and fully verified. I expect that the approval rate of such stablecoins will be higher or they may be approved earlier. Hong Kong's financial system may move towards a dual-track system Historically, Hong Kong's issuance of Hong Kong dollars against the US dollar stems from its position as an international financial center, with outward-oriented trade and financial transactions largely denominated and settled in US dollars. However, with Sino-US financial and trade frictions intensifying in 2025, the People's Bank of China's decision to halt the issuance of the RMB stablecoin may reflect deeper strategic considerations. In my opinion, the greater value of the digital RMB lies in promoting its internationalization, and Hong Kong is very likely to become an important platform for its promotion. The future Hong Kong dollar issuance mechanism may adopt a new "dual-track" structure—maintaining the existing 100% US dollar reserve while gradually increasing the proportion of assets such as the digital RMB, forming a more diversified reserve structure.