Xiao Feng: Mainland China cautious on stablecoins despite Hong Kong crypto enthusiasm

Xiao Feng: Mainland China cautious on stablecoins despite Hong Kong crypto enthusiasm

HashKey Group Chairman Xiao Feng commented on the growing excitement around stablecoins in Hong Kong, noting a stark contrast with the cautious stance maintained by regulators in mainland China. He pointed out a widening gap between market enthusiasm for crypto assets and the current regulatory environment.

According to Xiao, stablecoins primarily serve as an intermediary tool for trading volatile cryptocurrencies, rather than as independent financial instruments.

He also noted that mainland China is gradually re-entering the crypto conversation, partly due to pressure from international currency competition. This re-engagement, Xiao believes, will begin with stablecoins, eventually shifting focus toward real-world asset (RWA) tokenization. Over time, Chinese authorities may even become more accepting of Bitcoin, he suggested.

In the meantime, Hong Kong is emphasizing strong anti-money laundering (AML) standards to strengthen its reputation as a global financial center. Blockchain, Xiao argued, can surpass traditional systems in terms of transparency and traceability, making it an effective tool in financial compliance.

“Hong Kong has a real opportunity to position itself as an international finance hub,” he said. “Operating under common law and the ‘One Country, Two Systems’ framework, Hong Kong serves as a bridge between China and the rest of the world. Its role mirrors that of Asia’s Wall Street, while Singapore, by contrast, acts more like Asia’s Switzerland. Their financial paths are quite distinct.”

Starting August 1, Hong Kong introduced stricter penalties for the promotion of stablecoins without a license, including a fine of HK$50,000 (around $6,300) and up to six months in jail. The Hong Kong Monetary Authority (HKMA) previously stated that only a limited number of firms would be granted licenses to issue stablecoins.