Hong Kong Chamber of Commerce Wants Chinese Yuan-Backed Stablecoin

By Stephen Graves

The Hong Kong General Chamber of Commerce has proposed the issuance of a stablecoin backed by the Chinese yuan.

In a statement accompanying proposals for the local government's upcoming budget address, the business advocacy organization suggested that the government consider the issuance of "RMB stablecoins or stablecoins backed by a basket of different currencies, including RMB, in addition to HKD or USD stablecoins."

Citing the opportunities for financial innovation and inclusion presented by the "rapidly evolving virtual asset sector," the HKGCC said that the issuance of yuan-backed stablecoins would "promote the broader adoption of RMB and facilitate international trade transactions."

The HKGCC also suggested that the government explore the creation of a "Virtual Asset Connect Scheme," with a daily limit of approximately HK$20 billion ($2.5 billion).

The scheme would "enable Mainland companies to leverage Hong Kong as a platform for conducting virtual asset trading with global counterparts," the organization said in a statement, adding that it would serve as an incentive to foster the growth of the virtual asset industry, and "and reinforce Hong Kong’s position as an international financial hub."

Hong Kong has been exploring stablecoin regulation in recent months; in December 2023 the Hong Kong Monetary Authority, Financial Services and the Treasury Bureau jointly issued a public consultation paper on proposals for a stablecoin regulatory regime.

In a statement accompanying the issuance of the paper, HKMA chief executive Eddie Yue stated that while the virtual asset market is "still far from maturity," stablecoins could become the "interface between traditional finance and the virtual asset market."

The stablecoin supply has lagging over the past couple months. In late October, Castle Island Ventures partner and co-founder Nic Carter said on Twitter (X) that the low supply was an early sign that it could be "Up Only" from here.

Edited by Stacy Elliott.

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