Original | Odaily Planet Daily ( @OdailyChina )
Author | Fu Howe ( @vincent 31515173 )
On July 18, the Hong Kong Monetary Authority (HKMA) announced the list of participants in the Sandbox for stablecoin issuers, which sparked widespread discussion. Participating institutions include JD CoinChain Technology (Hong Kong) Co., Ltd., Yuanbi Innovation Technology Co., Ltd., and Standard Chartered Bank (Hong Kong) Co., Ltd. In recent years, Hong Kong has been continuously deploying in the Web3 industry. From the announcement in March this year that it would conduct stablecoin sandbox testing to the announcement of the sandbox list on July 18, what is the significance of Hong Kongs rapid deployment of Hong Kong dollar stablecoins?
Odaily Planet Daily contacted Rita, CEO of Yuanbi Innovation Technology Co., Ltd., which is on the sandbox list, and discussed in depth Yuanbi Technologys development strategy in the field of stablecoins and its specific operational plan under the regulatory framework of Hong Kong. In addition, in this interview, Rita also introduced how the foreign exchange market can use blockchain technology to achieve a trillion-level market scale. I believe that users who read this article can find new wealth opportunities from it.
The following is a transcript of the interview, edited by Odaily Planet Daily
Odaily Planet Daily: Can you introduce the background of Yuanbi Technology?
Rita: Yuanbi Technology was co-founded by several well-known investors and Mr. Chen Delin, former chief executive of the Hong Kong Monetary Authority. Our group’s current main businesses are Yuanbi wallet business and stablecoin business.
The Yuanbi wallet business is an important part of our group. We have an SVF license issued by Hong Kong, which is governed by the Hong Kong Monetary Authority. We are one of more than a dozen licensees. Our wallet supports multiple currencies and can provide remote account opening services for global companies. It is the only fiat currency wallet for enterprises among the stored value payment licenses. This business has been officially launched since November last year and has been running for 8 months.
Stablecoin business is an area that our group has always paid great attention to and attached great importance to. Since last year, we have talked about the opportunities and strategies of compliant stablecoins in many public occasions. At the end of December last year, the Hong Kong Monetary Authority issued the second round of stablecoin regulatory consultation opinions. In March this year, the HKMA announced the launch of the stablecoin regulatory sandbox. After the hard work of our team, we were honored to be one of the first three companies to enter the regulatory sandbox last week.
Odaily Planet Daily: Can you introduce the specific requirements of the sandbox and what you need to do?
Rita: In the regulatory environment of Hong Kong, the sandbox is not a new practice, but a common practice. It is actually a concept of trial and error under regulatory supervision before issuing a license. Specifically, you can refer to the announcement issued by the HKMA. The sandbox will test and pilot some application scenarios under the supervision of the HKMA, with the aim of developing these businesses on the basis of controlling risks.
At present, the specific scope and timetable are still under close communication with the HKMA. The HKMA will release more detailed content in the future. At present, after entering the sandbox, the three companies can start a series of tests and pilot projects under the guidance of the HKMA. This is a process of gradual exploration and development.
Odaily Planet Daily: Can you introduce some specific details about the Hong Kong dollar stablecoin?
Rita: Our Hong Kong dollar stablecoin is 1:1 equivalent to the Hong Kong dollar, and its reserves are composed of highly liquid assets and cash equivalents. Specifically, these reserve assets include bank deposits and asset products issued by licensed institutions in Hong Kong, as well as tokenized forms of these assets and deposits.
Regarding reserves, the conclusion of the consultation opinion issued by the Hong Kong Monetary Authority stipulates the scope and form of reserve assets of stablecoin issuers. As a compliant stablecoin issuer, we will strictly follow these regulations. The form of reserve assets includes bank deposits, asset products issued by Hong Kong licensed institutions, and tokenized asset forms of these products and deposits.
In terms of asset transparency, we believe that transparency and credibility are the core of compliant stablecoin issuers. The HKMA requires that asset disclosure and audits must be conducted by well-known third-party institutions every month to ensure the transparency and credibility of assets. Through these measures, regulatory support ensures everyones trust in compliant stablecoins.
Stablecoin regulation will be specifically legislated to ensure compliance with issuance. Companies currently entering the sandbox will have an advantage after legislation is completed and strive to become the first companies to obtain formal licenses. We will conduct tests according to the sandbox process and strive to obtain a formal license as soon as possible after legislation is completed and the licensing process is initiated.
Odaily Planet Daily: Which public chain is the Hong Kong dollar stablecoin based on? Does the HKMA have any requirements for the selection of public chains? Or do the companies participating in the sandbox choose the public chain to issue stablecoins themselves? Are there any selection requirements?
Rita: Our Hong Kong dollar stablecoin will definitely be issued based on a well-known public chain, but the specific public chain cannot be disclosed at present. The HKMA does not have specific requirements for issuers to choose a public chain. Each issuer can choose a suitable public chain as long as it is approved by the HKMA. Regardless of which chain they are issued on, these stablecoins will be compliant and recognized by the regulator.
Odaily Planet Daily: Will different companies choosing different public chains to issue Hong Kong dollar stablecoins lead to some payment and exchange obstacles?
Rita: This is a problem in the blockchain and Web3 world itself, not just a problem with Hong Kong stablecoins. The interoperability and interoperability between different chains are being solved, and many technology providers are working hard to solve this problem. We are also considering using multi-chain or cross-chain technology in the future, but this requires further communication with regulators. We will work hard to explore the use of cross-chain technology to solve these problems to ensure a smooth and convenient user experience.
Odaily Planet Daily: After the official announcement last week, have you made any new progress in the Hong Kong dollar stablecoin? What preventive measures do you have for possible trust crises and risks in the future?
Rita: Since the official announcement last week, we have received a lot of interviews and attention, and the response has been very good. In fact, we have been building our ecosystem since last year, signing many letters of intent for cooperation, and establishing partnerships with compliant exchanges, market makers, payment companies and other partners around the world. We have announced some cooperation projects, such as the intention to cooperate with K Company and Tonglian Payment, using our Hong Kong dollar stablecoin for cross-border clearing and cross-border payments.
In addition, we also intend to cooperate with Chainlink to use their cross-chain technology and on-chain asset disclosure products to disclose the consistency of reserve assets and on-chain issuance in real time. These collaborations are all aimed at strengthening our ecosystem and ensuring the transparency and credibility of stablecoins.
We have taken a variety of preventive measures to prevent possible trust crises and risks in the future. First, we ensure that the reserve of assets is not over-concentrated, which is very important. Second, we enhance the markets confidence in us through regulatory support and credible asset disclosure. The regulatory agencys compliance system fully considers the balance between user rights protection and market development.
Specific risk control measures include:
Transparency and credibility: Market trust in the issuer is key. We will regularly disclose assets and have them audited by well-known third-party institutions to ensure transparency.
Risk diversification: Avoid excessive concentration of asset reserves and diversify risks.
Compliance requirements: Strictly adhere to anti-money laundering regulations, use on-chain tools for monitoring, and conduct KYC (know your customer) audits on partners within the ecosystem.
We believe that Hong Kongs regulatory framework is very sound and can find the best solution between balancing risks and market development. Through these measures, we are committed to minimizing risks and ensuring the rights and interests of users and the stable development of the market.
Odaily Planet Daily: Why did you decide to participate in the issuance of the Hong Kong dollar stablecoin? How do you view the role of the Hong Kong dollar stablecoin in future global finance?
Rita: Our company was founded in 2021. Our vision is to be a compliant, trustworthy, and transparent stablecoin that connects traditional finance and the Web3 world. We believe that blockchain technology can solve many problems in traditional finance, such as the high cost and opacity of cross-border payments.
As a traditional financial and trade center, Hong Kong is strategically located in Asia, with a very large payment volume and an active financial market. We believe that under Hong Kongs regulatory framework, traditional finance and Web3 can be well connected to help solve many financial problems. The Hong Kong dollar is still very important among institutions and individuals in this region, so we chose to start with the Hong Kong dollar.
Odaily Planet Daily: Just now you mentioned more about the application scenarios of Hong Kong dollar stablecoin in cross-border payments and foreign trade. So are there any applications combined with Web3 scenarios?
Rita: Of course, we not only focus on traditional centralized application scenarios, but also actively deploy applications in the Web3 ecosystem. For example, the field of decentralized finance (DeFi) is an important direction. For example, the global foreign exchange market is a trillion-level market, but due to the inefficiency of the traditional financial system, there is a time difference in the clearing systems of various countries, and it does not operate 24/7. Blockchain can achieve 24/7 uninterrupted operation.
It is a big trend to bring the foreign exchange market onto the chain, which requires stablecoins of various currencies. At present, more than 95% of stablecoins are US dollar stablecoins, and it is impossible to form a multi-currency market. If we can promote the application of Hong Kong dollar stablecoins and other stablecoins, it will bring a huge market to DeFi. For example, decentralized exchanges such as Uniswap have already tried in the currency market, allowing trading pairs between various stablecoins.
We are also deploying in various exchanges around the world. As an important risk asset, stablecoins can provide options for investors in different markets. For example, investors may want to trade in Hong Kong dollar stablecoins or US dollar stablecoins, which can provide users with more choices and increase market trust and participation.
Odaily Planet Daily: Will decentralized foreign exchange exchange be restricted by regulations of various countries?
Rita: Supervision is indeed very important. As a compliant company, we will definitely follow the regulatory requirements of each place. Each country has different restrictions on foreign exchange conversion. For example, in mainland China, there is a certain amount of foreign exchange conversion each year. For this, we will ensure that the operations in various places comply with the local regulatory system.
In Hong Kong, the Hong Kong dollar is a freely convertible currency, so there are no special restrictions on the exchange of Hong Kong dollar stablecoins in Hong Kong. The main trading venues are licensed exchanges, which must follow the requirements of the Hong Kong Securities Regulatory Commission, including which tokens can be traded on the exchange. We will ensure that all operations are compliant in accordance with the regulations of the Hong Kong Securities Regulatory Commission.
Odaily Planet Daily: What do you think of Hong Kong’s layout in Web3? What core competitive advantages does it have compared to other countries?
Rita: The regulatory environment in various places is indeed constantly evolving. A deeper understanding of the regulatory status of different fields and formats will reveal that Hong Kong is actually at the forefront globally. Since Hong Kong announced its intention to develop into a Web3 center at the end of 2020, especially in 2023 and 2024, Hong Kong has introduced many measures in terms of regulation.
Although there have been both positive and negative comments about Hong Kong recently, as a market participant, we have actually experienced that Hong Kong is ahead of other markets in many aspects. For example, Hong Kong not only has exchange licenses and the introduction of relevant laws, but also has established a stablecoin sandbox and is about to issue stablecoin licenses. In addition, reviews of other licenses are also underway, such as OTC trading licenses.
The Hong Kong government has shown a strong willingness to develop this sector, which is one of Hong Kongs competitive advantages. Coupled with Hong Kongs status as a traditional trading center and financial center, these factors have brought many vitality and opportunities to Hong Kong.
