Authorities in Hong Kong are moving toward exclusive structures for a central bank digital currency (CBDC). At present, they want to launch a CBDC that would be a government-backed stablecoin. A member of the Hong Kong Special Administrative Region-based Legislative Council, Wu Jiezhuang, remarked on this move.
A Policymaker from Hong Kong Intends Converting CBDC into a Stablecoin for DeFi
Jiezhuang considers that converting its e-HKD – the Hong Kong digital dollar – into a stablecoin seems to be beneficial for the adoption of the latest technologies that also include the Web3. The decision to turn the e-HKD token into a stablecoin is taken to effectively deal with the risks related to the virtual assets operating in the Web3 space.
CypherMindHQ.com Artificial Intelligence Crypto Trading System - Surpass the competition with this cutting-edge AI system! Utilize the prowess of innovative algorithms and amplify your crypto trading strategies with CypherMindHQ. Learn more today!
While appearing in an interview conducted by China Blockchain News, Jiezhuang stated that the Hong Kong digital dollar’s present structure would be very helpful.
As per the official, it would assist the authorities to gain the trust of the investors in the case of the Web3 market along with offering improved production for the consumers by effectively confronting the problems such as exploits.
The stablecoins available in the market at present are all released by private firms and thus do not have supervision conducted by the government, according to Jiezhuang.
The official referred to the failures of many stablecoin projects that took place in the previous year. in the world of Jiezhuang, these incidents have caused a contagion that is greatly impacting the entire industry of crypto.
The policymaker additionally revealed that the proposed stablecoin could have a linkage to decentralized finance (or DeFi) to offer improved access to the Web3 ecosystems.
He disclosed that the government of Hong Kong can contemplate if the digital Hong Kong dollars’ issuance can be linked with the DeFi sector and turn into a significant infrastructure element of the trading platform’s virtual assets.
In addition to his position as a member of the Hong Kong Legislative Council, he also plays the role of a founding participant of G-Rocket which is a venture accelerator.
The respective project targets to allure 1,000 businesses in the Web3 world to organize trade in the state during the coming 3 years. Jiezhuang was co-founder G-Rocket in collaboration with Jonny Ng Kit-Chong (another member of the Hong Kong Legislative Council) back in 2016.
CypherMindHQ.com Artificial Intelligence Crypto Trading System - Outpace the competition with this high-end AI system! Leverage the capabilities of progressive algorithms and enhance your crypto trading performance with CypherMindHQ. Learn more today!
He is the new government official who has focused on the likely advantages of combining the DeFi and CBDC sectors. Thomas Moser, known as the Swiss National Bank’s governing board participant, stated in 2022’s September that additional stability could be offered by a CBDC to the DeFi space. In Moser’s words, it can also minimize the risks posed to this sector’s development.
Formerly, Mikkel Morch – the executive director serving at ARK36 (a hedge fund of digital assets), was of the view that a central bank digital currency does not require competing with any decentralized or private crypto assets. Simultaneously, he added, a CBDC could likely minimize the role played by the private stablecoins.
Hong Kong-based Entities Offering Financial Services Get Ready to Facilitate Retail Traders in Crypto World
Recently, the providers of financial services in Hong Kong – taking into account native fund managers and brokers – are getting ready for the latest licensing requirements. These requirements will permit them to offer services to their retail traders, as per a media report.
The Hong Kong authorities may allow retail investors (who have huge liquidity and market capitalization) to trade virtual assets and cryptocurrencies, according to the report.