The Hong Kong government has proposed the issuance of a ‘stablecoin’ named HKDG, which would be pegged to the jurisdiction’s foreign exchange reserves and be able to better compete with existing industry giants USDT and USDC.
The advantages of this are: expanding financial inclusion, increasing the efficiency of transactions, reducing transaction costs, improving local payment systems, as well as strengthening the fintech industry of the jurisdiction.
It is said that the government recognizes the potential risks associated with state-backed stablecoin, but believes the risk is still lower than that of assets from private companies, in part because of the regulation and transparency from blockchain technology.
Furthermore, it is felt that HKDG would help Hong Kong take a significant step towards de-dollarization and challenge the dominance of the US currency in the cryptocurrency industry.
In June, the Hong Kong government established a special group to provide recommendations for the industry’s improvement and advancement.
