In recent months, the financial world has witnessed a surge in investor interest around stablecoins—digital assets designed to maintain a stable value by being pegged to traditional assets like fiat currencies or commodities. This momentum reached new heights in May 2025 when the Hong Kong Special Administrative Region Legislative Council passed the Stablecoin Ordinance Bill in a landmark third reading. The move not only signaled Hong Kong’s intent to solidify its position as a global financial hub but also triggered a wave of market activity, with select stocks experiencing explosive growth.
Regulatory Milestone Ignites Market Reaction
The passage of the Stablecoin Ordinance Bill on May 21, 2025, marked a pivotal moment in digital asset regulation. Comprising 11 sections and 176 clauses, the bill establishes a licensing regime for issuers of legal tender-backed stablecoins under the oversight of the Hong Kong Monetary Authority (HKMA). It mandates strict requirements for reserve management, redemption obligations, and asset segregation—ensuring stability, transparency, and investor protection.
This regulatory clarity acted as a catalyst in financial markets. Companies with strategic exposure to virtual asset infrastructure saw immediate valuation re-rating. Two standout performers were ZhongAn Insurance (06060.HK) and Guotai Junan International (01788.HK), both of which surged on expectations of benefiting directly from Hong Kong’s stablecoin framework.
ZhongAn Bank: A Web3 Banking Pioneer
ZhongAn Insurance owns a 43.43% stake in ZhongAn Bank (ZA Bank), Hong Kong’s first fully digital bank. Since 2023, ZA Bank has championed a “Banking for Web3” vision, positioning itself at the intersection of traditional finance and blockchain innovation.
By July 2024, ZA Bank became the first digital bank in Hong Kong to offer reserve banking services to stablecoin issuers. It partnered with OSL-backed Circle Innovation Technology—one of the HKMA’s first sandbox participants—making it a foundational player in the emerging stablecoin ecosystem.
As of mid-2025, ZA Bank provides commercial banking services to over 80 Web3 companies and is the designated banking partner for licensed virtual asset trading platforms such as HashKey and OSL.
Analysts at Guosen Securities noted that with the ordinance in place, institutions could apply for stablecoin issuer licenses by year-end, placing ZA Bank in a prime position to support compliant issuers. DBS Bank went further, valuing ZA Bank at $2 billion and highlighting that ZhongAn Insurance’s shareholding implies an unrealized value of $887 million—value not yet reflected in its stock price.
Guotai Junan International: Expanding Into Virtual Asset Services
On June 24, 2025, Guotai Junan International received approval from the Securities and Futures Commission (SFC) to upgrade its existing Type 1 license (dealing in securities) to include virtual asset trading services and advisory capabilities.
This upgrade allows clients to trade major cryptocurrencies—including Bitcoin, Ethereum, and stablecoins like USDT—directly through its platform. The firm now offers a full suite of services covering trading, advisory, issuance, and distribution of virtual asset-related products, including OTC derivatives.
The announcement sparked a 198% single-day surge in its share price, closing at HK$3.46 on June 25. According to Shenwan Hongyuan Research, as of June 24:
- There were 11 licensed virtual asset exchanges in Hong Kong.
- 40 brokers had upgraded to offer integrated accounts with virtual asset trading.
- 40 asset managers held licenses to manage portfolios with more than 10% exposure to digital assets.
Market observers like Xu Kang, Chief Financial Analyst at Huachuang Securities, predict more international brokerages with strong client bases will pursue similar upgrades, further enriching Hong Kong’s digital financial ecosystem.
What Gives Stablecoins Their "Magic"?
Stablecoins derive their value from being pegged to real-world assets—most commonly fiat currencies like the U.S. dollar or euro. Introduced in 2014, they serve as a bridge between volatile cryptocurrencies and traditional finance.
There are four primary types:
- Fiat-collateralized: Backed 1:1 by reserves in bank deposits or short-term securities (e.g., USDT, USDC).
- Crypto-collateralized: Over-collateralized using other digital assets (e.g., DAI).
- Commodity-backed: Pegged to physical assets like gold or oil.
- Algorithmic: Use smart contracts to adjust supply and maintain price stability (e.g., earlier versions of UST).
But beyond price stability, their real power lies in enabling real-world asset (RWA) tokenization.
Unlocking Real-World Assets Through Tokenization
RWA refers to the process of converting tangible assets—such as real estate, bonds, commodities, intellectual property, or even art—into blockchain-based tokens. Stablecoins play a crucial role by providing a reliable medium of exchange and unit of account within this ecosystem.
As Professor Ouyang Rihui, Deputy Director at the China Institute of Internet Economy, Central University of Finance and Economics, explains: "Stablecoins enhance liquidity, divisibility, accessibility, and transparency of physical assets. They allow fractional ownership and instant settlement—transforming how we think about asset ownership."
Market data supports this trend:
- Global stablecoin market cap exceeded $240 billion by June 16, 2025—up from under $1.4 billion in 2017.
- Stablecoin transaction volume hit $15.6 trillion in 2024—surpassing Visa ($13T) and Mastercard ($8T).
- Despite lower transaction counts (0.41% of Visa’s volume), average transaction size is significantly higher—indicating dominance in B2B and institutional settlements.
Boston Consulting Group forecasts that the RWA market could reach $16 trillion by 2030, with stablecoins capturing 30–50% of that flow.
Laying Groundwork for Offshore RMB Stablecoins
Hong Kong’s regulatory move isn’t just about embracing innovation—it’s also a strategic step toward advancing offshore RMB digitalization.
As the world’s largest offshore RMB center, Hong Kong offers a unique advantage: a self-governed financial system capable of piloting financial innovations while maintaining close ties with mainland China’s monetary framework.
Ouyang Rihui emphasizes: "Hong Kong’s stablecoin regime can serve as a testbed for offshore RMB stablecoins—potentially accelerating RMB internationalization."
Xiao Feng, Chairman and CEO of HashKey Group, echoes this view: "Just as dollar-backed stablecoins reinforce USD dominance globally, China should consider launching offshore RMB stablecoins via Hong Kong. These could integrate with the e-CNY (digital yuan) system to create a modern cross-border settlement infrastructure."
Risks and Systemic Implications
While promising, widespread stablecoin adoption brings challenges.
One major concern is the "deposit migration" effect: users shifting funds from traditional bank deposits into stablecoins. This could erode banks’ liability bases, constrain loan expansion, and disrupt traditional banking models.
Moreover, because stablecoins function similarly to cash (M0), they can distort monetary aggregates and reduce the effectiveness of central bank policies like reserve requirement ratios (RRR). In essence, mass adoption acts like an unplanned "increase in reserve requirements," weakening tools like RRR cuts designed to stimulate credit growth.
They also complicate monetary measurement, affecting money supply calculations and potentially reducing the money multiplier effect within the current two-tier banking system.
Frequently Asked Questions (FAQ)
Q: What is a stablecoin?
A: A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to an underlying asset—typically fiat currencies like the U.S. dollar or euro.
Q: Why did ZhongAn Insurance’s stock rise after the stablecoin bill passed?
A: Because its subsidiary, ZA Bank, is positioned to provide reserve banking services to licensed stablecoin issuers—a critical infrastructure role expected to generate significant revenue.
Q: Can individuals trade stablecoins in Hong Kong now?
A: Yes—through licensed virtual asset exchanges or brokers with upgraded SFC licenses (like Guotai Junan International).
Q: Are stablecoins safe?
A: Regulated fiat-backed stablecoins with transparent reserves and audit trails are generally considered low-risk. However, algorithmic or undercollateralized versions carry higher risk.
Q: Could China launch its own stablecoin?
A: While unlikely domestically due to central bank digital currency (e-CNY) priorities, an offshore RMB stablecoin pilot via Hong Kong is increasingly seen as feasible and strategic.
Q: How do stablecoins impact monetary policy?
A: Large-scale adoption may reduce bank deposits and weaken traditional monetary transmission mechanisms, such as those relying on reserve ratios.
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Conclusion
The magic of stablecoins lies not just in their price stability—but in their ability to bridge traditional finance with blockchain innovation, unlock trillions in illiquid assets, and reshape monetary dynamics. With Hong Kong leading regulatory efforts, Asia is emerging as a key battleground in the future of digital finance. As institutions adapt and infrastructure matures, the ripple effects will extend far beyond stock prices—they’ll redefine how value moves in the 21st century.
Core Keywords: stablecoins, RWA tokenization, Hong Kong regulation, digital asset licensing, offshore RMB, ZA Bank, virtual asset trading, monetary policy impact