As stablecoin bill advances in Hong Kong legislature, advocates trumpet its many uses

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Stablecoins have the ability to expand their usage in the real financial economy, according to industry experts

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A bill about stablecoins is making its way through the Legislative Council. Photo: Shutterstock

Aileen Chuang

Published: 11:30am, 26 Dec 2024

Hongkongers are getting closer to experiencing the many applications of stablecoins, from domestic payments and cross-border trade settlements, as a bill covering the digital currency winds its way through the Legislative Council.

The Hong Kong government’s proposed Stablecoins Bill is coming closer to becoming law, as the city moves to balance financial stability and consumer protection while advancing its virtual assets agenda.

Stablecoins are digital assets issued by private entities that maintain a fixed value relative to a government-issued fiat currency or other reference rate. Traditionally, they serve as a bridge for transactions involving digital assets on blockchains, which cannot directly interact with fiat currencies.

While they are primarily known as a tool to trade cryptocurrency assets in the Web3 world, stablecoins have the ability to expand their usage in the real financial economy, according to industry experts.

One of the potential uses could be automating incentives, rebates or loyalty points in digital wallets, like the Octopus programme, by using stablecoins’ programmability, or the ability to input rules and data in the blockchain.

For example, if a consumer has a loyalty rewards system, their spending could automatically be credited to their loyalty programme and incentives could be applied at the checkout without the customer disclosing their membership details.