Stablecoins inspire hope, and hype, in Hong Kong
By Holmes Chan, with Katie Forster in Tokyo
Stablecoin excitement has gripped Hong Kong as the city prepares to launch a licensing system for the less volatile type of cryptocurrency, but authorities warn against overplaying its future role in financial systems.
The digital units have been touted as a cheaper, easier way to carry out monetary transactions -- and their popularity is soaring, with more than US$270 billion in circulation worldwide.
Unlike the heady highs and lows of bitcoin, the value of most stablecoins is kept steady by being linked to an existing national currency -- mainly the dollar -- or a commodity like gold.
Stablecoins are useful internationally because they enable fast, low-cost cross-border payments, handy in markets where hard currency is limited, such as Argentina and Nigeria.
The tokens, bought and sold on digital exchanges, are also used as a safe way for crypto investors to station their profits, instead of converting to cash.
"The size of the stablecoin market has reached a level where the cash flows have geopolitical implications," said Paul Brody, global blockchain leader at consulting firm EY.
More than 99 percent of stablecoin assets are in US dollars, so for other countries "if you're not a player, you could find yourself frozen out", Brody told AFP.
The US House of Representatives this month passed an act codifying stablecoin use, which Senator Bill Hagerty said will "ensure the dominance of the US dollar".
Hong Kong's own stablecoin regulations come in on Friday, part of a push to position itself as an Asian crypto hub as US President Donald Trump's support for the sector fuels a global resurgence.
'Overly idealistic' -
"The opportunities are massive," said Rita Liu, whose payment company is developing a Hong Kong dollar-denominated stablecoin in a government-run trial.
"There's a wave of legitimising the digital asset industry... Hong Kong is trying to be at the forefront of that wave," said Liu, chief executive of RD Technologies.
Crypto trading has been banned since 2021 in mainland China, which sees it as a "bit too close to gambling", Brody said.
He and others think stablecoins could prove more acceptable to Beijing, which has experimented with its own "e-yuan" central bank digital currency.
Officials may first want to see how things go in the semi-autonomous territory of Hong Kong.
So far, "a few dozen institutions" have expressed interest in issuing stablecoins or requested more information, Hong Kong Monetary Authority head Eddie Yue said last week.
But he called for the public to "rein in the euphoria" over the new bill, as "in the initial stage, we will at most grant a handful of stablecoin issuer licences".
"Some discussion on stablecoins may be overly idealistic," Yue warned, especially around their "potential to disrupt the mainstream financial system".
The hype can inflate companies' stock prices, he added, a point echoed by Lily King of crypto company Cobo.
"Some applications may be influenced by public relations strategies, as stablecoin-related news often drives market sentiment," she said.
Bigger problems -
RD's Liu, a former senior manager at Chinese payment platform Alipay, feels that "some of it is fake hype, and some is real", fuelled by "people's hope in this industry".
Stablecoins account for about seven percent of the global cryptocurrency market capitalisation, according to CoinGecko.
If they eventually become "a mainstay of the plumbing" in finance, Hong Kong could enjoy something of a "first-mover advantage", said Jonas Goltermann at Capital Economics.
Japan and Singapore already regulate stablecoins, while South Korea is exploring the possibility.
While stablecoin issuers usually assure buyers their currency is backed up by real-world reserves, they are not risk-free, and sometimes deviate from their pegged value due to market fluctuations, tech issues or problems with the underlying assets.
There is also the risk that stablecoins will become "more of a niche product" if banks work out how to make their own programmable money, Goltermann said.
"It makes sense for Hong Kong to try anything -- it's kind of on a declining path, for reasons that are not to do with technology. It's mostly about the politics, and its relationship with China," he told AFP.
"It's not like stablecoins are a silver bullet that can fix that. But that doesn't mean it can't help."
© 2025 AFP
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Japan Today
11 hours ago
- Japan Today
Nintendo quarterly revenue surges thanks to Switch 2
Pent-up demand for the new gadget from the 'Super Mario' gamemaker fuelled fan excitement at the release By Katie Forster Nintendo on Friday said quarterly revenue had more than doubled year-on-year thanks to the Switch 2, which became the world's fastest-selling console after its launch in early June. Pent-up demand for the new gadget from the "Super Mario" gamemaker fueled fan excitement at the release that saw sold-out pre-orders and midnight store openings. Like the hugely popular original Switch, the Switch 2 is a hybrid console that can be handheld or connected to a television, with a bigger screen and more processing power than its predecessor. It smashed industry records by selling 3.5 million units in its first four days, and Nintendo said Friday that the figure had increased to 5.8 million units by the end of June. "Net sales increased significantly in the first quarter, due mainly to the launch of Nintendo Switch 2," the Japanese company said as it reported a 132 percent on-year jump in sales for April-June, to 572 billion yen ($3.8 billion). Net profit in the quarter rose 19 percent on-year. However, a challenge for Nintendo will be maintaining a supply of hit games for the new system, gaming industry consultant Serkan Toto told AFP. "There are new games from the Pokemon, Metroid and Kirby franchises coming later this year, but some fans have already started to ask for even more titles," he said. But "the launch of Switch 2 has surpassed many people's expectations" and it will be hard for another console to match its strong start, Toto added. "Nintendo should be able to comfortably ride on this momentum through the holidays and into 2026," he predicted. The company expects to sell 15 million Switch 2 units by the end of March 2026 -- a target it left unchanged on Friday. Nathan Naidu of Bloomberg Intelligence said Nintendo was "likely" to hike this number, having already sold 40 percent of the target. The Switch 2 launch positions the company "for a major comeback after four straight years of lacklustre top-line momentum... barring punishing US tariffs that might prompt Nintendo to hike hardware prices", he wrote Friday. While Nintendo is diversifying into hit movies and theme parks, consoles remain at the core of its business. The original Switch soared in popularity during the pandemic with games such as "Animal Crossing" striking a chord during long lockdowns worldwide. It has sold 153 million units since its 2017 release, making it the third best-selling console of all time after Sony's PlayStation 2 and the Nintendo DS. The Switch 2, which has new features including controllers that can also be used like a desktop computer mouse, costs $449.99 in the United States -- more expensive than a launch price of $299.99 for the original. "Once the hardcore Nintendo fans are tapped out, the company will need to get to the next level by convincing mainstream players to make the jump to Switch 2," Toto noted. But the postponed launch of the hotly anticipated "Grand Theft Auto VI" (GTA6) by U.S. publisher Rockstar Games from this year to May 2026 will be a boon, he said. "If GTA6 (had) launched this year, it would have sucked almost all the oxygen out of the room and made marketing Switch 2 definitely harder for Nintendo." © 2025 AFP
Japan Today
12 hours ago
- Japan Today
Renault profits slump as competition intensifies
Renault has hit a rough patch as it reckons with its stake in trouble partner Nissan and a sluggish European market By Taimaz SZIRNIKS French automaker Renault said Thursday that the tough retail and commercial van market in Europe had squeezed profits although it was able to maintain profitability better than many rivals. Excluding exceptional items, Renault saw its first-half net profit slump 69 percent to 461 million euros ($526 million). However, it suffered 11.6 billion euros in exceptional losses related to its Japanese partner Nissan. That includes 9.3 billion it announced at the beginning of July resulting from a change in the way it handles accounting of its Nissan stake so that it no longer impacts its operating results. Renault rescued Nissan in 1999 and the two automakers have held stakes in one another since, in a rocky partnership that never saw them merge. Heavily indebted Nissan has hit another rough patch, posting a net loss of $4.5 billion for the financial year to March 2025 and announcing plans to cut 15 percent of its workforce. Renault has fared well in recent years, largely thanks to a number of new own-branded models brought to market, as well as its low-cost Dacia range, and by tapping into a consumer shift to hybrid models. However Renault's heavy reliance on Europe, where the market has never fully recovered from pandemic-era drop in sales and contracted by 1.9 percent in the first half of the year, means it faces a difficult road ahead. Moreover, in June, it lost its dynamic CEO, Luca de Meo, to Kering, a French luxury conglomerate that includes Gucci. He was replaced on Wednesday by Francois Provost, a long-time company veteran who has been helping execute its strategic plan. "Our first-half results, in a challenging market, were not aligned with our initial ambitions," Provost, 57, said in a statement, saying actions were already being taken to achieve the company's targets. "Nevertheless, Renault Group's profitability remains a reference in our industry, and we are determined to maintain this standard." Provost said the current trading environment "is difficult in Europe, marked by a drop in the retail market (for private customers) and by a market for commercial vehicles which is experiencing a significant decline". "We know exactly what must be done, particularly having benchmarked our best competitors, especially our Asian competitors," Provost observed. Provost underlined the company's costly commitment to its Alpine team in F1, saying it had ambitions to "achieve success" in 2026 with a new car. There had been speculation over those ambitions given the team's struggles at the tail end of the constructors' championship which some observers had suggested might see Renault sell up. Internationally, Provost said Renault will maintain South America and India among its "priorities," but added there was "no major alliance project" with Chinese partner Geely. Analysts at Oddo BHF said Provost was bringing a much-awaited visibility to Renault and forecast the constructor would be able to "bounce back quickly after this difficult first half". Renault said it's operating margin in the first half was 6.0 percent -- down by 2.1 percentage points -- but said it hopes to raise that to 6.5 percent for the full year. Rival Stellantis -- which includes the French brands Citroen and Peugeot -- saw its margin squeezed to just 0.7 percent in the first half of this year. Volkswagen, Europe's largest carmaker saw its margin slide to 4.7 percent. Both groups are more exposed to U.S. tariffs than Renault, which does not operate in the United States. Renault's revenue rose by 2.5 percent overall, but automotive revenue only edged 0.5 percent higher in the first half of the year. © 2025 AFP
NHK
13 hours ago
- NHK
US Fed Governor Kugler to resign, allowing Trump to pick replacement
The US Federal Reserve has announced that its board member, Adriana Kugler, will step down on August 8. President Donald Trump will replace her with his pick. The Fed said on Friday that Kugler will resign and return to a university as a professor this fall. She will have resigned before the end of her term set in January next year. Kugler is one of the seven members of the board of governors. The Fed chair is elected from the board members. US media suggested Trump would take the opportunity to influence the leadership of the central bank. Trump has strongly criticized Fed Chair Jerome Powell over monetary policies, apparently believing he should resign. News outlet Axios reported that Kugler's resignation will give Trump "an early opportunity to appoint a favored candidate for potential leadership of the central bank." Trump spoke to reporters after Kugler's resignation was announced. He said, "I'm very happy" that "I have an open spot on the Federal Reserve Board."
