Original author: Yin Chen
Original editor: Deng Yongyun
Original source: Bloomberg Businessweek
In early June this year, Liu Peng, CEO of Jingdong Coinlink (hereinafter referred to as Jingdong Coinlink), accepted an exclusive interview with Bloomberg Businessweek/Chinese Edition. In the interview, he emphasized that stablecoins are not equivalent to cryptocurrencies such as Bitcoin and Ethereum, but are similar to mobile payments, both of which are payment tools. As a veteran in the payment industry, Liu Peng was deeply involved in the design and promotion of the product as a core member of WeChat Pay. Since then, he has been responsible for payment business in large companies such as Huawei. Today, Liu Peng said that he has captured a feeling similar to the eve of the mobile payment blowout-in his view, payment-type stablecoins will play a disruptive and positive role in scenarios such as international trade as the new financial infrastructure of the Web3 era.
Decentralization, low transfer costs, transparent and traceable transactions... Stablecoins anchored to fiat currencies are moving from the crypto world to the broader traditional financial system with their many advantages. On May 30, Hong Kong officially gazetted the Stablecoin Ordinance, marking that this international financial center will clearly regulate stablecoin activities related to Hong Kong and the Hong Kong dollar through a licensing system. As early as December 2023, Hong Kong announced that it would implement a licensing system for issuers of fiat stablecoins; in July 2024, a total of three institutions, including JD Coin Chain, entered the stablecoin issuer sandbox (hereinafter referred to as the sandbox) launched by the HKMA to conduct stablecoin-related tests.
Liu Peng revealed that the scenario testing of JD Coin Chain in the sandbox is progressing smoothly, and it plans to launch stablecoins anchored to the Hong Kong dollar and other currencies respectively.
JD Coin Chain was registered in Hong Kong in March 2024 and is a subsidiary of JD Technology Group, which is a business group of JD Group (9618.HK), a leading e-commerce company in the Mainland. Although it was established in Hong Kong for a short time, Liu Peng believes that one of the first-mover advantages of JD Coin Chain is that it has a cold start scenario from zero to one, that is, the JD e-commerce ecosystem. The group did not disclose the specific number of third-party merchants on the platform. When Liu Peng participated in the Hong Kong Fintech Week in October 2024, he mentioned that if compliant stablecoins are issued, massive merchants on the JD platform can use stablecoins to improve efficiency in upstream and downstream settlements, and manage funds more flexibly overseas.
In fact, in a market where USDT and USDC, two major US dollar stablecoins, account for more than 80%, stablecoins issued by licensed issuers in Hong Kong need to find other attractions, including usage scenarios, in addition to the compliance advantage. Among them, cross-border payments are undoubtedly a place where many stablecoin issuers show their magic. At the same time, retail payments also have positive significance in improving the market penetration and brand building of stablecoins.
The Stablecoin Regulations will officially come into effect on August 1 this year. Globally, Singapore, the European Union, the United States and other places have successively brought stablecoins with payment nature under regulation, and the current stablecoin market of about US$250 billion is becoming hot.
Looking ahead, will compliant stablecoins promote a paradigm shift in payments, allowing mobile payments that previously moved from “offline to online” to further evolve from “online to on-chain”? Can Hong Kong, which has rapidly enacted legislation, use stablecoins to consolidate and enhance its key position in international trade? In an era where multiple currency-pegged stablecoins coexist, how will the global payment and financial systems change?
In May this year, JD.com’s stablecoin conducted the second phase of self-testing in the “sandbox”. What is the latest progress?
As of early June, we have mainly tested the Hong Kong dollar stablecoin, and will test other fiat stablecoins later. Based on market demand, we expect the two stablecoins to be issued at the same time. Unlike the first phase, which mainly tested product functions and technical details, the second phase focuses on testing the use of stablecoins in three practical scenarios: cross-border payments, investment transactions, and retail payments.
In the cross-border payment scenario, we plan to expand users through both direct customer acquisition and indirect customer acquisition (such as cooperation with compliant wholesalers). In the investment and trading scenario, we are negotiating cooperation with global compliant exchanges to launch JD Stablecoin in different regions. In terms of retail, the first to land is JD Global Sales Hong Kong and Macau Station, when users can be the first to use stablecoins to shop in JDs self-operated e-commerce scenarios.
When does JD CoinChain expect to obtain a stablecoin issuer license and list stablecoins on compliant exchanges? What are your plans for the initial issuance scale?
The specific timeline depends on regulation. We expect to obtain the license in early Q4 of this year and launch JD Stablecoin at the same time. JD Stablecoin will be issued on the public chain, and anyone can publicly view the issuance volume and other data.
Currently, the most popular application scenario for stablecoins is cross-border payments. In this scenario, a large number of transactions use USDT and USDC. How can compliant stablecoins issued in Hong Kong gain a foothold in this market?
First of all, compliance itself is the core competitiveness. As the regulations are implemented and the business is promoted, the markets understanding of this will gradually mature. As a newly issued compliant stablecoin, the goal of JD Stablecoin is not to roll in scenarios such as Crypto Native or investment transactions, but to open up a new battlefield, that is, to connect the traditional cross-border trade settlement market. This market has a large number of physical enterprises, cross-border trade participants, payment technology companies, etc., and they all need safe, compliant, transparent and auditable stablecoin services. Therefore, whether it is product design or customer development methods, we will have a certain degree of targeting. We expect that international trade in Asia Pacific, the Middle East, Africa, South America and Europe may first use stablecoins issued in Hong Kong for payment and settlement.
Many financial technology companies have achieved cost reduction and efficiency improvement in cross-border payments through blockchain technology and localization strategies. Recently, the founder of a leading cross-border payment company has questioned that stablecoins have limited value in cross-border transactions of G10 currencies. What do you think of this view?
Stablecoins are a systematic project, not just a product. The competitiveness of compliant stablecoins lies not only in low cost, high efficiency and good experience, but also in the stable custody mechanism, secure clearing and settlement channels and reliable operation logic to protect the rights and interests of holders. As a stablecoin issuer, we are also willing to cooperate with cross-border payment companies to build a stablecoin ecosystem.
In the JD ecosystem, which links will be the first to apply stablecoins? In addition to JDs existing ecosystem, how to improve the market acceptance of JDs stablecoins?
JD’s stablecoin will be the first payment and settlement platform for the global sales and collection scenarios in the JD ecosystem. In addition to the JD ecosystem, given the differences in scenario characteristics, transaction timeliness, and fund settlement logic in different industries, we plan to tailor-make stablecoin payment solutions for different industries. Currently, JD’s stablecoin reduces the transfer time from several days to seconds, reduces the cost by at least half compared to traditional transfers, and the on-chain fund turnover is also faster. These advantages are believed to attract international trade participants to adopt JD’s stablecoin.
Speaking of capital turnover, we are curious about how supply chain finance-related services related to cross-border payments will evolve in the era of stablecoin payments?
Stablecoin issuers can only issue, not engage in pledge, lending, or pay interest. Therefore, for supply chain financial services, we will discuss cooperation with licensed institutions with relevant qualifications. From the perspective of solution design, we are sorting out the scenarios of JD International Logistics. In theory, under the premise of authorization by all parties, SMEs going overseas can put data such as (overseas) warehouse orders on the chain, and use stablecoins to process payments and financing, which will significantly improve the efficiency of the entire process. Of course, everything is subject to relevant laws and compliance requirements.
As for payments, what do you think are the similarities and differences between the current stablecoin payments and the mobile payments you studied several years ago?
Many people think of payment stablecoins as cryptocurrencies such as Bitcoin and Ethereum, which are completely different. Web3 stablecoins, like Web2 mobile payments, are essentially payment tools that aim to reduce costs and increase efficiency, improve user experience, and promote inclusive finance through advanced technologies and business models. Mobile payments boosted the rapid development of the mobile Internet industry, so will payment stablecoins, as Web3 infrastructure, play the same role?
From a technical perspective, unlike the centralized mobile payment, stablecoins are based on a decentralized technical architecture; from a product structure perspective, stablecoins also have an additional issuance system compared to products such as WeChat Pay. Because of this, the regulation of stablecoins is relatively complex and cannot rely solely on compliance in a single region, but must be coordinated with global compliance.
Especially in mainland China, mobile payments have almost replaced cash, so where might the critical point between stablecoins and traditional financial infrastructure be?
In just five years, mobile payment has surpassed cash in terms of transaction volume, user coverage, and scenario penetration. One of the core driving factors is the low-cost popularization of QR codes. From setting up expensive POS machines to printing a few QR code stickers, the sharp decline in payment settlement costs has, to a certain extent, promoted small and micro businesses to fully access mobile payments. It may be too absolute to say that stablecoins can 100% replace the current financial infrastructure, but there are indeed many physical financial service scenarios that will undergo drastic changes. From a To B perspective, large transactions may be the first to accept stablecoins, especially in cross-border payment scenarios with high friction costs, large exchange rate fluctuations, and long time; from a To C perspective, to thoroughly stimulate users motivation to use stablecoins for payment, phenomenal products and applications such as WeChat Red Packets in WeChat Pay may be needed.
As a practitioner, how do you think the ecosystem of Hong Kongs stablecoin industry should be improved?
The key is to establish a risk-based, pragmatic and flexible open ecosystem in accordance with the requirements of the Stablecoin Ordinance, in which regulators, issuers, wholesalers, scenario parties, users and investors all need to cooperate with each other. Fund settlement is both the last link and the beginning of all business. We need to seize this breakthrough and leverage Hong Kongs role as an international financial center and trade center to expand the circulation and use of stablecoins issued in Hong Kong in multiple regions, and further build Hong Kong into an international stablecoin settlement hub.
Hong Kong is not only a global trade center, but also an offshore RMB hub. Will an offshore RMB stablecoin be issued here?
In terms of product technology, there is little difference between issuing offshore RMB stablecoins and Hong Kong dollar stablecoins. Moreover, the potential application scenarios of offshore RMB stablecoins are already available, such as the Belt and Road Initiative. JD Coin Chain has always supported and promoted the issuance of offshore RMB stablecoins in the future, but we need to consider not only business logic, but also comprehensive considerations from aspects such as legal compliance. In the end, whether offshore RMB stablecoins can be implemented still depends on mainland supervision.
