Advocates for cryptocurrency and blockchain technology have released a report urging the Hong Kong government to introduce a stablecoin linked to the region's dollar, aiming to challenge the dominance of Tether and other dollar-backed coins. The report, co-authored by individuals involved ed in financial innovation, proposes the issuance of the HKDG (Hong Kong Dollar Government) stablecoin to strengthen the city's position in the digital economy. The authors, including representatives from prominent institutions and a doctoral student, believe that such a stablecoin would enhance transaction efficiency, reduce costs , and support Hong Kong's digitalization efforts.
The report highlights the potential benefits of a government-backed stablecoin, including increased financial system efficiency, transaction freedom, high security, openness, and cross-border liquidity, all of which can foster broader financial innovation. The authors express concerns that the government's current plan to encourage private institutions to issue stablecoins is too conservative, deviate from its original intention to promote cryptocurrencies and blockchain technology. They argue that the HKDG, backed by the government and its substantial foreign exchange reserves exceed ing the total market capitalization of Tether and USDC, would offer greater credibility and lower risk.
Launching the HKDG stablecoin could challenge the dominance of the US dollar, provide additional liquidity for government projects, and facilitate risk monitoring and assessment by officials, according to the report. However, the authors also acknowledge potential risks, including legal and regulatory challenges, potential international disputes related to transactions involving illicit funds, and security vulnerabilities. The report emphasizes that a government-issued stablecoin carries significantly less risk than those issued by private institutions.
In June, the Hong Kong government established a working group to oversee the development of Web3 technology, demonstrating its commitment to embracing blockchain and digital assets. Hong Kong has attracted numerous companies involved in digital assets and blockchain, with over 80 reportedly considering setting up operations in the city, in addition to the 800 fintech companies already established there.
