Original | Odaily Planet Daily (@OdailyChina)
Author | How is the husband (@vincent31515173)
On July 18th, the Hong Kong Monetary Authority (HKMA) announced the list of participants in the stablecoin issuer "sandbox," which has sparked widespread discussion. The participating institutions include JD Coin Chain Technology (Hong Kong) Limited, Circle Coin Innovation Technology Limited, and Standard Chartered Bank (Hong Kong) Limited. In recent years, Hong Kong has been continuously laying out in the Web3 industry, from announcing the launch of stablecoin sandbox testing in March of this year to the announcement of the sandbox list on July 18th. What are the implications of Hong Kong's rapid layout of the Hong Kong dollar stablecoin?
Odaily Planet Daily contacted Rita, CEO of Circle Coin Innovation Technology, one of the companies on the sandbox list, and delved into the development strategy of Circle Coin Technology in the stablecoin field and its specific operational plans under the Hong Kong regulatory framework. In addition, in this interview, Rita also introduced how the foreign exchange market uses blockchain technology to achieve a market scale of trillions. It is believed that users reading this article can find new wealth opportunities from it.
The following is the interview record, organized by the editors of Odaily Planet Daily
Odaily Planet Daily: Can you introduce the background of Circle Coin Technology?
Rita: Circle Coin Technology was co-founded by several well-known investors and Mr. Chen Delin, former President of the Hong Kong Monetary Authority. Our group's main businesses currently include Circle Coin Wallet and stablecoin business.
The Circle Coin Wallet business is an important part of our group. We have been issued the SVF license by Hong Kong, which is regulated by the Hong Kong Monetary Authority, and we are one of the dozen licensed entities. Our wallet supports multiple currencies and can provide remote account opening services for global enterprises. It is the only fiat currency wallet for enterprises among the stored value payment licenses. This business was officially launched in November last year and has been operational for 8 months.
The stablecoin business is an area that our group has always paid close attention to. Since last year, we have discussed the opportunities and strategies for compliant stablecoins in many public occasions. At the end of last December, the Hong Kong Monetary Authority issued the second round of stablecoin regulatory consultation conclusions. In March of this year, the HKMA announced the launch of stablecoin regulatory sandbox. After the efforts of our team, we were honored to be one of the first three companies to enter the regulatory sandbox last week.
Odaily Planet Daily: Can you introduce the specific requirements of the sandbox and what you need to do?
Rita: In the regulatory environment of Hong Kong, the sandbox is not a new practice but a common one. It is actually a concept of trying first under the supervision of regulation before issuing a license. Specifically, you can refer to the announcement issued by the HKMA. The sandbox will conduct some application scenario testing and trial operations under the supervision of the HKMA, with the aim of developing these businesses on the basis of risk control.
Currently, the specific scope and timetable are still being closely communicated with the HKMA. The HKMA will release more detailed content in the future. After these three companies enter the sandbox, they can start a series of testing and trial operations under the guidance of the HKMA. This is a process of gradual exploration and development.
Odaily Planet Daily: Can you introduce some specific details about the Hong Kong dollar stablecoin?
Rita: Our Hong Kong dollar stablecoin is equivalent to the Hong Kong dollar at a 1:1 ratio, and its reserve is composed of highly liquid assets and cash equivalents. Specifically, these reserve assets include bank deposits and asset products issued by licensed institutions in Hong Kong, as well as tokenized forms of these assets and deposits.
Regarding the reserve, the conclusions of the consultation opinions issued by the HKMA stipulate the scope and form of reserve assets for stablecoin issuers. As a compliant stablecoin issuer, we will strictly adhere to these regulations. The forms of reserve assets include bank deposits, asset products issued by licensed institutions in Hong Kong, and tokenized forms of these products and deposits.
In terms of asset transparency, we believe that transparency and credibility are the core of compliant stablecoin issuers. The HKMA requires monthly asset disclosure and audits by well-known third-party institutions to ensure the transparency and credibility of the assets. Through these measures, regulatory endorsement ensures trust in compliant stablecoins.
Stablecoin regulation will be legislated specifically to ensure compliant issuance. Companies entering the sandbox currently will have an advantage after the legislation is completed, striving to be among the first to obtain formal licenses. We will conduct testing according to the sandbox process, and wait for the completion of the legislation and the start of the licensing process to strive for obtaining formal licenses as soon as possible.
Odaily Planet Daily: Which public chain is the Hong Kong dollar stablecoin based on? Does the HKMA have any requirements for the selection of the public chain, or do the companies participating in the sandbox choose the public chain to issue stablecoins on their own? Are there any selection requirements?
Rita: Our Hong Kong dollar stablecoin is definitely issued based on a well-known public chain, but the specific public chain cannot be disclosed at the moment. The HKMA does not have specific requirements for the selection of the public chain by the issuer. Each issuer can choose a suitable public chain on their own, as long as it is recognized by the HKMA. Regardless of which chain it is issued on, these stablecoins will be compliant and recognized by the regulatory authority.
Odaily Planet Daily: Will different companies choosing different public chains to issue Hong Kong dollar stablecoins cause obstacles in payments and exchanges?
Rita: This is a problem inherent in the blockchain and Web3 world, not just a problem with Hong Kong dollar stablecoins. The interoperability and interconnectivity between different chains are being addressed, and many technology providers are working hard to solve this problem. We are also considering using multi-chain or cross-chain technology in the future, but this requires further communication with regulatory authorities. We will strive to explore the use of cross-chain technology to solve these problems, ensuring a smooth and convenient user experience.
Odaily Planet Daily: After the official announcement last week, do you have any new progress in the Hong Kong dollar stablecoin? What preventive measures do you have for potential trust crises and risks in the future?
Rita: Since the official announcement last week, we have received a lot of interviews and attention, and the response has been very good. In fact, we have been building our ecosystem since last year, signing many memorandums of cooperation and establishing partnerships with compliant exchanges, market makers, and payment companies around the world. We have announced some cooperation projects, such as the cooperation intentions with Company K and UnionPay for cross-border settlement and cross-border payments using our Hong Kong dollar stablecoin.
In addition, we have a cooperation intention with Chainlink to use their cross-chain technology and on-chain asset disclosure products to ensure the consistency of reserve assets and on-chain issuance in real time. These collaborations are all aimed at enhancing our ecosystem and ensuring the transparency and credibility of stablecoins.
In response to potential trust crises and risks in the future, we have taken various preventive measures. First, we ensure that the reserve assets are not overly concentrated, which is very important. Secondly, through regulatory endorsement and credible asset disclosure, we enhance market confidence in us. The regulatory framework of the regulatory authorities fully considers the balance between user rights protection and market development.
Specific risk control measures include:
Transparency and credibility: Market trust in the issuer is crucial. We will regularly disclose assets and have them audited by well-known third-party institutions to ensure transparency.
Risk diversification: Avoid excessive concentration of reserve assets and diversify risks.
Compliance requirements: Strictly comply with anti-money laundering regulations, use on-chain tools for monitoring, and conduct KYC (Know Your Customer) audits on partners within the ecosystem.
We believe that the regulatory framework in Hong Kong is very sound and can find the best solution between risk and market development. Through these measures, we are committed to minimizing risks and ensuring the rights of users and the stable development of the market.
Odaily Planet Daily: Why did you decide to participate in the issuance of the Hong Kong dollar stablecoin? How do you view the role of the Hong Kong dollar stablecoin in the future global finance?
Rita: Our company was established in 2021, and our vision is to create a compliant, trustworthy, and transparent stablecoin that connects traditional finance and the Web3 world. We believe that blockchain technology can solve many problems in traditional finance, such as the high cost and lack of transparency in cross-border payments.
Hong Kong, as a traditional financial and trade center, strategically located in Asia, has a very large payment volume and active financial markets. We believe that under the regulatory framework in Hong Kong, it can effectively connect traditional finance and Web3, helping to solve many financial issues. The Hong Kong dollar remains very important among institutions and individuals in this region, so we chose to start with the Hong Kong dollar.
Odaily Planet Daily: You mentioned more about the application scenarios of the Hong Kong dollar stablecoin in cross-border payments and foreign trade. Are there any applications combined with the Web3 scene?
Rita: Of course, we are not only focusing on traditional centralized application scenarios but also actively laying out applications in the Web3 ecosystem. For example, the decentralized finance (DeFi) field is an important direction. For example, the global foreign exchange market is a trillion-dollar market, but due to the inefficiency of traditional financial systems, there are time differences in the clearing systems of various countries, and they do not operate 24/7. However, blockchain can achieve uninterrupted operation 24/7.
Moving the foreign exchange market onto the blockchain is a major trend, and it requires stablecoins of various currencies. Currently, over 95% of stablecoins are USD stablecoins, which cannot form a multi-currency market. If we can promote the application of Hong Kong dollar stablecoins and stablecoins of other currencies, it will bring a huge market to DeFi. For example, decentralized exchanges like Uniswap have been experimenting in the currency market, allowing trading pairs between various stablecoins.
We are also laying out on various exchanges globally. Stablecoins, as an important risk asset, can provide choices for investors in different markets. For example, investors may want to trade using Hong Kong dollar stablecoins or USD stablecoins, providing users with more choices and increasing market trust and participation.
Odaily Planet Daily: Will decentralized foreign exchange be restricted by regulations in various countries?
Rita: Regulation is indeed very important. As a compliant company, we will definitely comply with the regulatory requirements in various places. Each country has different restrictions on foreign exchange, for example, in mainland China, there is an annual quota for foreign exchange. In this regard, we will ensure that our operations in different places comply with local regulatory systems.
In Hong Kong, the Hong Kong dollar is already a freely convertible currency, so there are no specific restrictions on the exchange of Hong Kong dollar stablecoins in Hong Kong. The main trading venues are licensed exchanges, which must comply with the requirements of the Hong Kong Securities and Futures Commission, including which tokens can be traded on the exchange. We will ensure that all operations comply with the regulations of the Hong Kong Securities and Futures Commission.
Odaily Planet Daily: How do you view Hong Kong's layout in Web3, and what core competitiveness does it have compared to other countries?
Rita: The regulatory environment in different places is indeed constantly evolving. A deeper understanding of the regulatory status in different fields and formats will reveal that Hong Kong is actually at the forefront globally. Since Hong Kong announced its intention to develop into a Web3 center at the end of 2020, especially in 2023 and 2024, Hong Kong has introduced many measures in terms of regulation.
Although there have been both positive and negative comments about Hong Kong recently, as market participants, we have actually experienced that Hong Kong is leading in many aspects compared to other markets. For example, Hong Kong has not only introduced exchange licenses and related laws but has also established a stablecoin sandbox and is about to issue stablecoin licenses. In addition, the review of other licenses, such as OTC trading licenses, is also underway.
The Hong Kong government has shown a strong willingness to develop in this area, which is one of Hong Kong's competitive advantages. Coupled with Hong Kong's status as a traditional trade and financial center, these factors together bring a lot of vitality and opportunities to Hong Kong.
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