The recent passage of Hong Kong’s Stablecoin Bill has ignited a wave of optimism across financial markets, triggering sharp rallies in stocks tied to digital asset innovation. As regulators formalize a framework for stablecoin issuance, companies like ZhongAn Insurance and Guotai Junan International have emerged as key beneficiaries—highlighting the growing synergy between traditional finance and blockchain-based assets.
This shift isn't just about stock prices; it reflects a deeper transformation in how value is stored, moved, and monetized in the digital economy. With real-world assets (RWA), cross-border payments, and even future offshore RMB stablecoins on the horizon, the implications are far-reaching.
Hong Kong Takes a Pioneering Step with the Stablecoin Bill
On May 21, 2025, the Legislative Council of the Hong Kong Special Administrative Region passed the Stablecoin Ordinance Bill in its third reading—an 11-part, 176-clause legislative milestone that establishes a licensing regime for issuers of fiat-backed stablecoins.
The bill introduces the concept of "designated stablecoins"—those pegged to official currencies or other value units specified by the Hong Kong Monetary Authority (HKMA). Only licensed entities can issue such coins, ensuring compliance with strict requirements around reserve management, redemption rights, and client asset segregation.
This move strengthens Hong Kong’s position as a regulated hub for virtual asset activities and lays the groundwork for broader financial innovation—particularly in tokenizing real-world assets and enabling programmable money.
Market Reacts: ZhongAn Insurance and Guotai Junan Surge
Capital markets wasted no time identifying early winners. Two firms—ZhongAn Insurance (06060.HK) and Guotai Junan International (01788.HK)—have seen explosive growth, despite operating in different segments of the financial sector.
ZhongAn Insurance: Banking on Web3
ZhongAn Insurance holds a 43.43% stake in ZA Bank, Hong Kong’s first digital-only bank. Since the bill's passage, ZhongAn’s shares surged nearly 60% from May through early July, peaking at HK$22.75 on June 19.
Why? Because ZA Bank is at the forefront of stablecoin infrastructure. In July 2024, it became the first digital bank in Hong Kong to offer custodial banking services to stablecoin issuers, partnering with Yuanbi Innovation Technology—one of the HKMA’s first sandbox participants.
ZA Bank already serves over 80 Web3 companies and is the banking partner for licensed platforms like HashKey and OSL. Analysts at DBS Bank estimate ZA Bank’s potential valuation at $2 billion, implying an unrealized value of $887 million for ZhongAn—value not yet reflected in its current share price.
Guotai Junan International: Unlocking Virtual Asset Access
On June 24, 2025, Guotai Junan International received approval from the Securities and Futures Commission (SFC) to upgrade its license—now allowing it to provide virtual asset trading services and related advisory functions.
This means clients can now trade cryptocurrencies like Bitcoin and Ethereum, as well as stablecoins such as USDT, directly through its platform. The firm can also issue and distribute virtual asset-linked products, including OTC derivatives.
The market responded instantly: shares jumped 198% in a single day, closing at HK$3.46 on June 25.
According to Shenwan Hongyuan Research, there are now 40 licensed brokers in Hong Kong offering virtual asset trading via upgraded Type 1 licenses. This expansion signals growing institutional acceptance and paves the way for more global players to enter the ecosystem.
What Gives Stablecoins Their "Magic"?
Stablecoins first emerged in 2014 as a solution to crypto volatility—digital tokens pegged to stable assets like the U.S. dollar or gold. Today, they’re central to both decentralized finance (DeFi) and institutional innovation.
There are several types:
- Fiat-collateralized (e.g., USD-backed)
- Crypto-collateralized
- Commodity-backed (e.g., gold)
- Algorithmic (value maintained via code)
Their appeal lies in combining blockchain efficiency with price stability—making them ideal for payments, settlements, and asset tokenization.
Driving Real-World Asset (RWA) Innovation
One of the most transformative roles of stablecoins is enabling RWA tokenization—converting physical assets like real estate, bonds, art, or intellectual property into digital tokens on a blockchain.
As Dr. Ouyang Rihui, Deputy Director at Central University of Finance and Economics’ Institute of Internet Economy, explains:
“Stablecoins enhance liquidity, divisibility, accessibility, and transparency for tangible assets. They allow fractional ownership and instant settlement—something traditional finance struggles with.”
According to Huatai Securities, global stablecoin market cap reached over $240 billion by mid-2025**, up from under $1.4 billion in 2017—a growth of more than 170x. Stablecoins now represent about 7% of total crypto market value**.
Boston Consulting Group forecasts that the RWA market could hit $16 trillion by 2030, with stablecoins capturing 30%–50% of that flow.
Dominating Global Payment Volumes
Stablecoins are also outpacing traditional payment networks in transaction volume. In 2024 alone, they processed **$15.6 trillion** in transactions—surpassing both Visa ($13 trillion) and Mastercard ($8 trillion).
While transaction counts remain low compared to card networks (just 0.41% of Visa’s volume), the high average transaction size points to dominance in B2B settlements and crypto-native trading.
Visa data shows that over 70% of stablecoin usage still supports automated crypto trading—but this leaves significant room for growth in everyday payments and cross-border remittances.
Laying Groundwork for Offshore RMB Stablecoins
Hong Kong’s regulatory clarity may also pave the way for an offshore RMB stablecoin—a development with major implications for RMB internationalization.
As a global offshore RMB hub with independent regulatory authority, Hong Kong offers a unique sandbox for experimenting with digital currency innovation while maintaining alignment with mainland policy.
Dr. Ouyang notes that stablecoins could serve as a bridge between China’s central bank digital currency (CBDC) and global markets. By piloting an offshore RMB-pegged stablecoin in Hong Kong, authorities could test interoperability, capital controls, and monetary policy impacts—all within a controlled environment.
Xiao Feng, Chairman and CEO of HashKey Group, adds:
“Dollar-based stablecoins reinforce U.S. financial dominance. China must respond strategically—using Hong Kong as a testbed for RMB-linked digital assets.”
Such a move wouldn’t just boost Hong Kong’s status as an international financial center—it could accelerate the yuan’s role in global trade and investment.
Risks to Traditional Finance: Deposit Drain and Monetary Policy Challenges
Despite their benefits, widespread stablecoin adoption poses risks to conventional banking and monetary systems.
The "Deposit Drain" Effect
If users shift large sums into stablecoins backed by short-term government bonds or cash equivalents, commercial banks could face a liability squeeze—fewer deposits mean less capacity to extend loans.
This “deposit搬家” (deposit migration) effect could constrain credit creation and disrupt traditional bank profitability models.
Impact on Monetary Policy
Stablecoins mimic cash (M0) in function. Their rise complicates central banks’ ability to:
- Accurately measure money supply
- Control credit expansion via tools like reserve requirement ratios
- Influence interest rates effectively
For example, when people move deposits into stablecoins, it acts like a de facto reserve ratio hike, weakening the impact of monetary easing measures such as lowering reserve requirements ("RRR cuts").
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 commodities like gold.
Q: Why did ZhongAn Insurance’s stock rise after the Stablecoin Bill?
A: Because ZhongAn owns 43.43% of ZA Bank—the first digital bank in Hong Kong approved to provide reserve banking services to stablecoin issuers—positioning it as a key infrastructure player.
Q: Can individuals trade stablecoins in Hong Kong now?
A: Yes—through licensed virtual asset platforms or brokers with upgraded SFC licenses (Type 1 or Type 9), individuals can trade compliant stablecoins like USDT.
Q: Could Hong Kong launch its own RMB-backed stablecoin?
A: While not yet official, experts suggest Hong Kong is well-positioned to pilot an offshore RMB stablecoin as part of broader financial innovation strategies.
Q: Are stablecoins safer than other cryptocurrencies?
A: Generally yes—due to their pegs and reserve backing—but risks remain around transparency, regulation, and reserve quality.
Q: How do stablecoins affect central banks?
A: They challenge traditional monetary policy transmission mechanisms by reducing bank deposits and increasing demand for non-bank forms of digital cash.
Core Keywords
- Stablecoin
- Hong Kong regulation
- Real-world assets (RWA)
- Offshore RMB
- Tokenization
- Digital banking
- Virtual asset trading
- Monetary policy impact