Hong Kong stablecoin tackles the dollar hegemony with a three-pronged approach: digital gold and RWA become new strategic pivot points.

In the face of the new situation brought about by the U.S. "Stablecoin Act" promoting the global expansion of U.S. dollar stablecoins, Hong Kong urgently needs to build a stablecoin system with international competitiveness. Hong Kong legislator Zheng Yanjun published an article proposing three core concepts: ensuring redemption capability through strict regulation, leveraging China's trade volume to open up application scenarios, and enhancing circulation share through the tokenization of RMB assets. The article systematically elaborates on how Hong Kong can use innovative tools such as digital gold and RWA to break through the blockade of the U.S. dollar system, safeguarding monetary sovereignty and financial security.

The Hegemony of the US Dollar Stablecoin: A New Form of Financial Colonialism

The introduction of the U.S. "stablecoin legislation" (GENIUS Act) marks the consensus reached by the Trump administration and both parties on the fact that the wave of "de-dollarization" and the domestic debt crisis are shaking the foundation of the country. This legislation aims to bring the stablecoin market, which has a global average daily settlement volume exceeding $100 billion, into a regulatory framework, intending to revitalize the hegemony of the U.S. dollar through legalization.

The US dollar stablecoin is experiencing a mad expansion in developing countries. In Argentina, where the inflation rate has reached 211.4%, the proportion of stablecoin transactions surged to 61.8% in Latin America in 2024; in countries with severe fluctuations in fiat currency like Turkey, the US dollar stablecoin has become the preferred choice for private savings and payments, with a market share exceeding 90%. This new type of "shadow banking" is encroaching on traditional financial channels with lower thresholds and broader penetration.

What's more concerning is that the United States has mandated through legislation that stablecoin issuers must hold equivalent U.S. Treasury bonds as reserve assets, creating new demand amid a $36 trillion national debt crisis. Currently, U.S. Treasury interest has exceeded $1 trillion, accounting for 3.93% of GDP, with a deficit of $1.8 trillion. Tether, as the world's largest stablecoin issuer, has become the seventh largest holder of U.S. Treasuries, surpassing sovereign nations like Germany.

The Intrinsic Defects and Systemic Risks of Dollar Stablecoins

The US dollar stablecoin is not as "stable" as it appears on the surface. Its design, which is deeply tied to US Treasury bonds, has fundamental flaws: it not only forfeits the core advantage of blockchain's "decentralization," but also faces the risk of decoupling due to the potential "blowup" of US Treasury bonds.

Financial giants like Dalio have warned that the U.S. debt issue could collapse within three years. Once a U.S. debt crisis erupts, dollar stablecoins backed by U.S. debt will face a chain reaction of collapse risks. This financial colonial model that shifts national debt crises globally will ultimately backfire on its own stability.

At the same time, the global expansion of the US dollar stablecoin is eroding the monetary sovereignty of developing countries. If allowed to grow unchecked, our trading partners may be forced to use US dollar stablecoins to pay for Chinese exports, rendering years of "de-dollarization" efforts futile. More critically, the monetary policy-making power of countries in the Global South will be "usurped," creating a new form of financial dependency.

Three Strategies for Breaking the Deadlock of Hong Kong Stablecoins: Regulation, Scenarios, and Innovation

To address this challenge, Hong Kong needs to adopt a three-pronged strategy:

First, establish the highest global standards for regulatory systems. Implement the Basel cryptocurrency asset rules in 2026, demonstrating exceptional solvency through improved regulation and transparent, reliable reserve assets. The Hong Kong Monetary Authority has begun soliciting opinions on the stablecoin regulatory framework, requiring issuers to maintain full reserves and undergo regular audits, which will provide investors with guarantees far exceeding those of USD stablecoins.

Second, leverage China's international trade volume to open up application scenarios. As the world's largest trading nation, China's total import and export value of goods reached 41.76 trillion yuan in 2023. It can promote the use of Hong Kong stablecoins for settlement with trading partners, utilizing the massive trade volume to drive the efficient circulation of stablecoins between the on-chain and the real economy. Currently, the renminbi is already the world's second-largest trade financing currency, laying the foundation for establishing an issuance path for offshore renminbi stablecoins ("CNH stablecoin").

Third, promote the tokenization of RMB assets (RWA) innovation. Tokenize audited mainland entity assets in Hong Kong to attract international funds to invest in RMB assets. The soon-to-be-completed 1000-ton precious metal storage facility at Hong Kong Airport, combined with its status as an LME approved delivery location, can support the tokenization of physical gold. Issuing "digital gold" priced in Hong Kong dollar stablecoins or digital RMB can break the Western monopoly on gold pricing.

Digital Gold: Hong Kong's Strategic Breakthrough

Gold is becoming a popular product under the "safe-haven" theme, but traditional gold trading has pain points such as high storage costs, difficulty in division, and complex rights confirmation. The World Gold Council's plan to trial digital gold in London next year presents an important opportunity for Hong Kong.

Hong Kong can leverage its precious metal storage infrastructure and the advantages of the LME platform to be the first to launch a digital gold product anchored to physical gold. By utilizing blockchain technology, it achieves immutable ownership records and transparent custody arrangements, creating a more reliable gold financial product than Western counterparts. This not only enhances the appeal of crypto assets in Hong Kong but also paves the way for China to compete for commodity pricing power.

RWA Tokenization: Connecting Chinese Assets with Global Capital

The core bottleneck of the mismatch between the internationalization of the Renminbi and China's trade scale is the lack of sufficiently large financial products for offshore Renminbi docking and asset management. RWA tokenization is the key to unlocking this dilemma.

High-quality audited physical assets of mainland enterprises can attract international funds for investment through holding Hong Kong dollar stablecoins or digital RMB after being tokenized in Hong Kong. This not only opens up a new channel for international financing for mainland enterprises but also provides abundant investment targets for offshore RMB, fully leveraging Hong Kong's strategic value as a "super connector." Currently, institutions in Hong Kong have already started pilot projects for asset tokenization in real estate, artworks, and other areas, and the next step should expand to broader fields such as infrastructure and intellectual property.

Conclusion: Building a stablecoin ecosystem with Chinese characteristics to defend financial sovereignty

The United States attempts to extend the dollar's hegemony into the digital age through the "Stablecoin Act", but its model tied to debt is destined to be unsustainable. Hong Kong, leveraging the advantages of "one country, two systems", China's trade volume, and the spirit of financial innovation, is fully capable of constructing a more resilient stablecoin system.

The key is to break out of the US dollar paradigm and create a stablecoin ecosystem supported by the real economy, centered on investor protection, and oriented towards the internationalization of the Renminbi. Through innovative tools such as digital gold and RWA, Hong Kong can not only safeguard national financial security but also provide the world with alternatives that go beyond the US dollar system, truly realizing a new financial landscape of "East Rising."

The next three years will be a critical period for the stabilization of the stablecoin landscape. Hong Kong should accelerate the implementation of regulations, infrastructure development, and international cooperation, to establish a stablecoin system that can challenge the dominance of the US dollar before 2026, gaining strategic initiative for the country in the new round of financial competition.