What is the recent popular stablecoin?

Author: He Liuying, Interface News

Stablecoins have set off another round of market boom.

Recently, there have been reports that Ant International is planning to apply for stablecoin licenses in Hong Kong and Singapore. On June 12, Ant International responded that it is accelerating investment and expanding cooperation in global treasury management, and investing the company's AI, blockchain and stablecoin innovation in real and reliable large-scale applications.

"We welcome the Hong Kong Legislative Council to pass the "Stablecoin Bill", which will submit an application as soon as possible after the bill takes effect on August 1 and the relevant channels are opened. We hope to contribute more to the construction of a future international financial center in Hong Kong." Ant International said.

It is also reported that Bian Zhuoqun, vice president of Ant Group and president of Ant Digital Technology’s blockchain business, revealed in an interview that Ant Digital Technology has started applying for a Hong Kong stablecoin license and has conducted too many rounds of communication with regulators.

On June 12, Ant Financial concept stocks in Hong Kong stocks rose collectively, among which Yunfeng Financial rose sharply during the session, with a single day rising by 54.24%.

What is a stablecoin? How much room does Hong Kong dollar stablecoin have to move? Why do financial institutions and technology companies join the market? What are the pain points in the industry?

1:1 Asset Bottom

For a long time, the large price fluctuations of virtual assets have been criticized by the market, and stablecoins are relatively stable in prices due to anchoring with specific assets, making them easier to accumulate value trust.

According to the Stablecoin Ordinance (hereinafter referred to as the Ordinance) published in the Gazette by the Hong Kong Special Administrative Region Government of China on May 30, the meaning of stablecoins must be "refer to one of the following to maintain stable value - a single asset; a group or a basket of assets".

Hong Kong also specifically defines the concept of "specified stablecoins", which refers to stablecoins that refer to one or more official currencies; one or more calculation units specified by the Hong Kong Monetary Authority (hereinafter referred to as the "HKA"); one or more storage forms of economic value specified by the HKMA; or a combination of the above to maintain stable value.

The most familiar stablecoin for the public is Tether (USDT), which is pegged to the US dollar. Tether said that all Tether is pegged to the corresponding fiat currency (for example, 1USDT=1 USD) and is 100% backed by Tether's reserves.

In order to ensure the true stability of stablecoins, the United States, the United Kingdom, the European Union, Hong Kong, Singapore and others have set strict requirements on the reserve assets of stablecoins.

The Hong Kong Ordinance clearly states that the market value of the reserve asset portfolio must be at any time, at least equivalent to the face value specified by the stablecoin that has not been redeemed and still circulated, and the reserve assets of the licensee must be of high quality, high liquidity and minimum investment risk.

The United States is advancing the Innovation Act for Guiding and Establishing a US Stable Coin National Innovation Act (hereinafter referred to as the Genius Act) requires that in order to issue payment stablecoins, the issuer's outstanding stablecoins must be supported with a ratio of at least 1:1 reserve assets, including US dollar cash, US Treasury bonds that expire within 93 days, etc.

According to the 2020 digital financial strategy, the EU has launched the Crypto Asset Market Supervision Regulations (MiCA), in which the rules regarding asset reference tokens and electronic currency tokens (both are stablecoins) will take effect on June 30, 2024.

The Monetary Authority of Singapore issued stablecoin regulatory regulations on August 15, 2023. The new regulatory framework applies to any single currency stablecoin issued in Singapore and pegged to the Singapore dollar or any G10 (Group of Ten) currencies. Reserve assets include cash denominated in the pegged currency, cash equivalents and bonds that mature within three months.

On May 28, 2025, the Financial Conduct Authority (FCA) issued a consultative document that advises issuers to ensure that the stablecoins in circulation are supported by a low-risk, liquid asset pool 1:1.

Jeffrey Ding, chief analyst at HashKey Group, told Interface News reporters that the purpose of setting a 1:1 peg is essentially to ensure that the stablecoins held by users are supported by real assets and avoid "idle finance" or bank run risks.

"The 1:1 peg means that each unit of stablecoin corresponds to a unit of real assets of equal value, so that investors and users have the confidence to hold, use or even trade such assets in large quantities to avoid a trust crisis. If the reserves are not fully covered, the 'face value redemption' promise of stablecoin will be invalid, which is not conducive to financial institutions or users to quickly exchange it into fiat currency when needed, affecting circulation and settlement functions." Jeffrey Ding emphasized.

There is a view in the market that the United States links stablecoins to US Treasury bonds, aiming to build a "digital Bretton Woods system."

Deng Jianpeng, professor of the Law School of Central University of Finance and Economics and director of the Financial Technology Rule of Law Research Center, told Interface News reporters, "For the United States, since 90% of stablecoins are currently linked to the US dollar, its introduction of regulatory regulations has its own interests. For example, the reserve requirements for stablecoins are US dollar cash, US bonds, etc., which also means that the issuer of US dollar stablecoins will buy a large amount of US bonds and become a big buyer of US bonds."

Standard Chartered's report believes that US legislation on stablecoins is expected to be introduced soon, and the Genius Act is likely to be passed in the summer, which will help the total supply of stablecoins increase from the current $230 billion to $2 trillion by the end of 2028. Stablecoins require reserves, and the expected increase in supply will bring new demand for US $1.6 trillion in short-term U.S. Treasury bonds.

Find application scenarios

Standard Chartered's report pointed out that the total scale of stablecoins is currently about US$230 billion. The first and second stablecoins are USDT issued by Tether and USDC issued by Circle, respectively, with market shares reaching 63% and 25% respectively.

In order to get a share of the stablecoin market, Hong Kong has accelerated the relevant processes. In March 2024, the Hong Kong Monetary Authority launched a "sandbox" for stablecoin issuers, providing a test environment for institutions that intend to issue fiat currency stablecoins in Hong Kong; on May 21, 2025, the Hong Kong Legislative Council passed the "Stablecoin Bill" to establish a licensing system for fiat stablecoin issuers in Hong Kong; on May 30, 2025, the Ordinance will come into effect in the Gazette; on August 1, 2025, the Ordinance will be implemented.

For Hong Kong, which wants to actively become an international virtual asset center, entering the stablecoin is an unexpected move.

"Hong Kong strives to become an international financial center, including becoming an innovation center of WEB3, issuing Hong Kong dollar stablecoins, or issuing regulated stablecoins anchored by other legal tenders in Hong Kong, which is of great significance to enhancing Hong Kong's status as an international financial center," said Deng Jianpeng.

However, due to the obvious market share disadvantage, the development prospects of the Hong Kong dollar stablecoin need to be seen. "The stablecoin market is still oligopoly, with stablecoins pegged to the US dollar accounting for the vast majority, and TEDA's stablecoins account for the vast majority. Therefore, for a stablecoin pegged to the non-US dollar, in addition to regulatory permissions, the most important thing is whether the application scenario can be found and the actual role and market share of the non-US dollar stablecoins are expanded." Jeffrey Ding said.

"The Hong Kong dollar stablecoin anchors the Hong Kong dollar, and the market value of the Hong Kong dollar itself is relatively small. From the perspective of scenarios, the main usage scenarios of stablecoins are the investment and trading field of cryptocurrencies. Although Hong Kong has regulated cryptocurrency exchanges and virtual asset ETFs, the overall trading volume is still relatively small. Therefore, in the short term, the Hong Kong dollar stablecoin may maintain a certain size, but this size will not be too large." Deng Jianpeng believes.

"Of course, application scenarios can be made from virtual currency transactions and develop to cross-border payments, because Hong Kong itself is an important financial center and service trade fulcrum, and there should be great demand for cross-border payments." Deng Jianpeng added.

Eugene, chief commercial officer of OSL, said in a media group interview recently, "OSL supports companies to make cross-border payments through stablecoins. The advantage is that it can shorten the payment time. If you want to transfer a sum of money from South America to Hong Kong today, if you pass through a bank, I think it will take at least 3-5 working days, because there are many transit banks involved, and stablecoins can achieve T+0. From the perspective of cost, the cross-border remittance cost of stablecoins is also lower than that of traditional financial institutions."

For stablecoins issued in Hong Kong, choosing a cross-border scenario is also a necessary measure.

"I think stablecoins must be cross-border and cannot be used only in Hong Kong, otherwise the value may not be that great," said Zhang Yinghua.

Of course, it is a long-term project to open up cross-border transactions on and off the chain. "This not only involves the regulatory allowances of various countries and regions, but also involves future financial infrastructure. As a cryptocurrency trading platform, we will also strive to promote communication between all parties." Zhang Yinghua emphasized.

Many people compete for the deer

The stablecoin industry is approaching, and the actions of relevant institutions are accelerating.

In February this year, Standard Chartered Hong Kong, Ainte Group and Hong Kong Telecom have reached an agreement to establish a joint venture, hoping to apply for a license from the Hong Kong Monetary Authority under the new regulatory system to issue stablecoins pegged to the Hong Kong dollar.

"We are stepping up the relevant preparations and will announce more details in a timely manner." Dominic Maffei, head of digital assets and financial technology at Standard Chartered Hong Kong, said recently.

It is worth noting that the stablecoin itself has generated a financial incremental space. On June 5, the digital currency giant Circle was listed on the New York Stock Exchange in the United States, becoming the "first stablecoin stock", with an opening price of US$69 per share. As of the closing of US stocks on June 12, Circle's stock price had risen to US$106.54 per share, with a total market value of US$23.7 billion.

"I think the development prospects of stablecoins are very impressive. In addition to Circle, which has just been listed in the United States and stablecoin giant TEDA, I believe that companies in China, Europe, South America and other places will also join the market one after another, and the future is very impressive." Deng Jianpeng said.

The major manufacturers responded quickly. As mentioned above, Ant International and Ant Digital Technology have already taken action in stablecoin licenses.

"In fact, Ant Digital Technology participated in the Ensemble regulatory sandbox of the Hong Kong Monetary Authority as early as August last year, mainly promoting the RWA (reality asset tokenization) project of physical assets such as new energy charging piles. As the parent company of Alipay, Ant Group applied for a Hong Kong stablecoin license this time, aiming to strengthen the layout of blockchain technology and further serve its cross-border payment and fund management business." Jeffrey Ding said.

From the perspective of global competition, "Ant International positiones itself as a benchmark against international payment giants such as Stripe, PayPal, Visa, MasterCard, etc., which have all been involved in stablecoin issuance. Ant International, as one of the first companies to publicly announce plans to apply for Hong Kong stablecoin issuance license, has a significant first-mover advantage with its strong fund management capabilities and global financial technology background." Jeffrey Ding said.

In terms of benchmarking, in August 2023, global payment giant PayPal announced the launch of the US dollar-pegged stablecoin PayPal USD (PYUSD), 100% backed by US dollar deposits, short-term US Treasury bonds and similar cash equivalents, and was issued by the US fintech company Paxos Trust Company.

According to PayPal, customers can convert PYUSD between PayPal and a compatible external wallet; use PYUSD to send personal payments; choose PYUSD to pay the fee at checkout; and redeeate any cryptocurrency supported by PayPal to PYUSD.

In fact, while striving for the first-mover advantage, there are also considerations for asset layout. "After participating in the issuance of stablecoins, institutions can obtain legal tenders paid by stablecoin holders at a cost of nearly zero cost. Institutions can also purchase some low-risk investment products, such as US Treasury bonds, etc., which will generate returns. In particular, the higher the issuance of stablecoins and the larger the base, the investment returns may be very considerable." Deng Jianpeng said.

Still many pain points

"At present, there are few legal and regulatory rules for stablecoins, and the popular stablecoins on the market actually have compliance and financial risks." Deng Jianpeng emphasized.

Including the issue of asset stability, the above mentioned that stablecoins will require 100% of the pegged reserve assets. Under this move, how much can the asset security of stablecoins be protected?

Jeffrey Ding believes that the 1:1 real asset linkage improves asset security, but cannot completely eliminate risks. Highly secure assets (such as short-term US Treasury, cash, bank deposits) can be quickly cashed out in a short period of time, greatly reducing liquidity risks. However, if the reserves are volatile assets or low-liquid assets (such as commercial paper and tokenized securities), the risk will increase significantly, so Hong Kong and the United States will stipulate that reserve assets must be high-liquid assets, including cash and short-term US Treasury bonds.

Jeffrey Ding mentioned that both Hong Kong and the United States stipulate that reserve assets are held by independent, regulated custodians and are completely isolated from the issuer's own funds, which can prevent damage to user assets due to the issuer's bankruptcy or misappropriation of funds, and accept third-party accounting audits or on-chain verifiable mechanisms, which can enhance transparency and public confidence and prevent false endorsement or information asymmetry.

One risk is that if there is a problem with the pegged reserve assets, there will be problems with the stablecoin. In March 2023, Silicon Valley banks announced bankruptcy due to liquidity crisis, while Circle's $3.3 billion of its $40 billion USDC reserves were in Silicon Valley banks. This caused the USDC price to plummet to around $0.87 at one point, which was a serious deviation from the anchor price.

The application level is facing compliance issues. "In the field of cross-border payments, stablecoins have obvious advantages, both in terms of payment cost and payment efficiency, which are better than traditional financial institutions, but its challenge lies in compliance issues. The issued stablecoins must be strictly linked to the corresponding reserve cash or other equivalents. If they cannot be done, it is equivalent to over-issuance of currency or fraud. This may be a major challenge that regulatory attention should be paid to in the future." Deng Jianpeng said.

"Another challenge is anti-money laundering. Stablecoins may be exploited by hackers or used in other illegal channels, which is also a big challenge," said Deng Jianpeng.

It is worth pointing out that an industry consensus is that high compliance costs are also a major problem that virtual asset participants must overcome.

"Finally, for other countries that use non-USD or non-mainstream legal currency, or for those countries whose legal currency credit has gone bankrupt and whose legal currency inflation is very serious, the availability of stablecoins is very convenient, and there is no need to open a bank account, as long as it can access the Internet, it will make such countries sell their own currencies and exchange them for US dollar stablecoins. Then the financial sovereignty, monetary sovereignty, and financial security of these countries will pose major challenges." Deng Jianpeng emphasized.