Written by: Liang Yu
Edited by: Zhao Yidan
In January 2026, during a public budget consultation in Hong Kong, a citizen’s bold suggestion broke the conventional discussion: Can Hong Kong issue a stablecoin pegged to gold to strengthen its position as an international financial center? Under the spotlight, Financial Secretary Paul Chan gave a response that industry insiders have been repeatedly digesting: Hong Kong will gradually develop stablecoins, and after taking a prudent first step, will “consider” the idea of pegging to gold or other assets, emphasizing the need for “caution.” He also clarified that virtual currencies are part of financial innovation, which Hong Kong should embrace, but must be incorporated into an appropriate regulatory framework.
These few words of response, like a stone thrown into a calm lake, create ripples far beyond the mere projection of a product. In today’s global race for digital assets, which has shifted from technological enthusiasm to institutional competition, Hong Kong’s stance is not just about controlling the rhythm but a clear strategic declaration. It reveals a third path different from “wild growth” or “strict containment”: not pursuing the superficial fame of first-mover products, nor engaging in a race of lax regulation, but instead dedicating its most valuable regulatory credibility and resources to building a set of “institutional infrastructure” that can be understood and trusted by global capital.
- Hong Kong’s Strategy: Safe Speed or Trustworthy Future?
Paul Chan’s “cautious handling” tone must be examined within the context of global regulatory currents. In the digital asset space, laissez-faire and suppression are two simple options, but Hong Kong’s choice of a third way—developing under strict regulation—is the most complex and requires the greatest institutional confidence. This is not merely a balancing act but a strategic trade-off based on Hong Kong’s own endowments and ultimate goals. As an international financial center, Hong Kong’s core value lies in its credible commitments to the rule of law, financial stability, and free capital flow. Any innovation that could systematically erode this credibility, regardless of short-term profit prospects, must give way to the integrity of the system.
Therefore, Hong Kong’s regulatory philosophy towards stablecoins and broader RWA (Real-World Asset Tokenization) is fundamentally defensive. It primarily answers not “how to make innovation happen faster,” but “how to ensure risks are locked within the system when innovation occurs.” The repeated emphasis by the Deputy Chief Executive of the HKMA on “high thresholds” and “single-digit licenses” embodies this operational philosophy. The goal is not approval but setting benchmarks; not market prosperity but defining standards. This proactive slowdown of market supply, creating a “regulatory model room” at high cost, will inevitably sacrifice market activity in the short term, but its long-term aim is to secure “regulatory dominance” in the global digital asset rule system. This contrasts sharply with Singapore’s “agile regulation” and the Middle East’s “strategic sprint,” highlighting Hong Kong’s different weighting as a mature, in-depth financial market: speed is secondary, safety and trust are paramount.
- Why Must It Be a “Two-Step” Approach? The Inescapable Test of Fiat-Backed Stablecoins
Making fiat-backed stablecoins the unshakable “first step” is the most ingenious aspect of Hong Kong’s overall strategy. This choice can be understood through a counterfactual question: what if Hong Kong skipped this step and directly approved gold or more complex asset-backed stablecoins? The answer would reveal a series of “innate flaws” that cannot be addressed through post-hoc regulation.
First, the verification costs of asset anchoring differ significantly. The Hong Kong dollar has the Hong Kong Monetary Authority as the ultimate credit guarantor and liquidity provider, with transparent reserves (mainly high-quality bonds and bank deposits), and existing audit and regulatory cooperation. Gold stablecoins involve independent verification of physical storage, reliability of insurance chains, and legal risks of cross-border transportation—making the “anchor” itself a complex product requiring additional trust-building. Before establishing a mature regulatory paradigm for simple anchors, directly engaging with complex ones is akin to building a tower on quicksand.
Second, the risk transmission pathways are ambiguous. The core risks of fiat stablecoins are credit and operational risks of issuers, with relatively clear boundaries. Once gold or other commodities are introduced, risks such as price volatility, the “double-spending” of physical assets through repeated collateralization, and cross-market contagion between commodity and digital currency markets will make the regulatory model extremely complex. Hong Kong’s regulators need to first develop a comprehensive, full-lifecycle regulatory process—covering issuance, redemption, reserve audits, stress testing, and bankruptcy handling—in the “single-variable model” of fiat stablecoins before upgrading to a “multi-variable model.”
Therefore, the “two-step” approach is not merely a gradual process but a strategic climb in regulatory capacity. The strict reserve asset requirements, real-time redemption commitments, and comprehensive AML regulations in Hong Kong’s “Stablecoin Ordinance” are precisely building a universal “regulatory underlying protocol” for the entire asset tokenization world. Only when this protocol proves robust and effective in simpler scenarios can Hong Kong confidently and with experience extend it to gold, bonds, and even more complex RWA sectors. This step is crucial in differentiating Hong Kong from jurisdictions attempting shortcuts, aiming to create a “regulatory interface” that seamlessly integrates with traditional finance.
- Opportunities and Boundaries of RWA: Which Assets Can Accelerate in Hong Kong?
While the article previously discussed the broad prospects of RWA, it did not clearly outline the “regulatory entry ladder” for RWA in Hong Kong. In fact, not all RWA innovations are on the same regulatory level. Hong Kong’s strategy is to build a clear “asset adaptation spectrum” based on the standardization, risk transparency, and connection to traditional finance of assets.
At the top of the spectrum are assets that can directly connect to existing regulatory frameworks. The tokenized green bonds issued by the Hong Kong government are prime examples. Their underlying assets are government credit, with clear transaction structures fully compliant with current securities laws; their innovation lies only in improving settlement efficiency. Next are highly standardized commodities like gold, with a global unified pricing system. Although involving physical custody, their market infrastructure is mature, making cross-institutional audits feasible. These assets are the most likely to be prioritized after Hong Kong completes its fiat stablecoin testing.
In the middle are assets requiring institutional reform and innovative regulatory tools, such as mainland China’s practice of computing power RWA and renewable energy infrastructure rights. The core challenge for these assets is standardizing valuation models and ongoing validation. For example, the value of AI server computing power depreciates with technological iteration—how to recognize depreciation curves? The cash flow of photovoltaic power stations is affected by weather and policies—how to obtain regulatory approval for valuation models? For such assets, Hong Kong is more likely to adopt a “regulatory sandbox” approach, allowing limited pilot projects until their risk measurement and management methods are fully validated, before integrating them into mainstream regulation. The HKMA and SFC’s recent collaborative “sandbox” mechanisms are strategic interfaces designed for such innovations.
At the far end of the spectrum are assets that are difficult for Hong Kong’s mainstream financial system to accept in the short term, such as non-standard art, intellectual property, and personal data assets. These assets have highly subjective valuations, poor liquidity, and lack risk hedging tools, conflicting with Hong Kong’s core pursuit of financial stability. Hong Kong may adopt a long-term wait-and-see approach, waiting for other markets to experiment and establish international standards before deciding whether to follow. This “selective action and restraint” boundary reflects Hong Kong’s mature and cautious RWA strategy: it does not chase the hype of “everything can be tokenized,” but steadily promotes “prioritizing the tokenization of financial assets.”
- Hong Kong’s Global Positioning: Not Speed, But What?
Placing Hong Kong’s choices within the global regulatory landscape reveals its uniqueness and strategic foresight. Currently, major jurisdictions follow roughly three paths: the “rule application” model represented by the US, attempting to fit digital assets into existing frameworks like the Securities Act and Commodity Exchange Act, leading to long-term litigation and uncertainty; the “agile balancing” model represented by Singapore and the UAE, rapidly iterating between encouraging innovation and risk control to seize first-mover advantages; and the “comprehensive legislation” model represented by the EU, establishing all-encompassing rules through laws like MiCA, which may become rigid.
Hong Kong has pioneered a fourth path: the “infrastructure-first” model. It is not rushing to launch the broadest product list but is committed to building a “regulatory power plant” with the highest design standards, maximum safety redundancy, and the most user-friendly interfaces. Once this “power plant” is operational, it can supply stable and reliable “systemic electricity” for various digital asset products. This creates a subtle contrast with Singapore: Singapore may introduce diverse crypto products earlier, but Hong Kong aims to provide a compliant environment that top global financial institutions feel “at home” in. For managing trillions in assets like pension funds and insurance companies, the certainty and safety of the operating environment outweigh product diversity. Hong Kong’s focus is on attracting long-term institutional capital that values “quality over quantity.”
Therefore, Paul Chan’s cautious stance on gold-backed stablecoins is not an obstacle to innovation but a safeguard of Hong Kong’s ultimate competitive advantage. Between “rapid trial and error” and “slow foundational building,” Hong Kong firmly chooses the latter. Its strategic assumption is: in the marathon of digital asset development, the final victory depends not on a few steps at the start but on who builds the “infrastructure stations” that provide water, guidance, and emergency support along the way, according to whose standards. Hong Kong’s goal is to become that indispensable “infrastructure provider.”
Conclusion: Hong Kong’s True Goal: Becoming a Trustworthy “Generator”
At its core, Paul Chan’s “careful consideration” reflects Hong Kong’s profound insight into the essence of digital asset development: when the novelty of technology fades, asset value ultimately returns to trust; and trust can only be forged by an unbreakable system. What Hong Kong is undertaking is a strategic investment—trading short-term market heat for long-term institutional discourse.
This article demonstrates that Hong Kong’s competitiveness will no longer be solely reflected in trading volume within skyscrapers but also in the clarity of legal provisions, the rigor of sandbox testing, and the conditional reflex of global institutions when facing uncertainty—trust in the “Hong Kong standard.” This path may not be loud or flashy, but it could forge a moat more enduring than any financial bubble—becoming the most trusted, stable, and indispensable “institutional gateway” connecting traditional finance and the digital future. Perhaps this is the ultimate role Hong Kong has chosen to maximize its core endowments in the grand digital financial revolution.
