Stablecoins, which are cryptocurrencies whose value is tied to entities such as commodities, fiat currencies and financial instruments, have become prominent in recent years.

Standard Chartered Bank in Hong Kong, Web3 organisation Animoca Brands, and tech, media and telecoms firm HKT have joined forces to build a stablecoin backed by Hong Kong dollars. The organisations’ joint venture wants to apply for a licence from the Hong Kong Monetary Authority.

Stablecoins are cryptocurrencies whose value is tied to another currency such as the HK dollar, a commodity such as gold, or a financial instrument. 

“Digital assets are here to stay and the development of different forms of tokenized money is integral to the advancement of this industry. That is why we are actively involved in various central bank digital currencies, tokenized deposits and, of course, stablecoins projects,” Bill Winters, Standard Chartered CEO, said in a statement earlier this week.

UK/Hong Kong-listed Standard Chartered said it has taken part in all of HKMA’s tokenized money projects in recent years. 

Animoca Brands, which is based in Hong Kong, helps the venture to explore use cases for stablecoins across the Web3 ecosystem.

Standard Chartered in Hong Kong, Animoca Brands and HKT have taken part in the HKMA stablecoin issuer sandbox launched in July 2024, to explore how stablecoins can help financial markets and payment systems develop.

On 17 July 2024, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) jointly concluded consultations on a regulatory regime for stablecoin issuers in Hong Kong. Legislators in Hong Kong have proposed creating a regulatory regime, with a bill introduced in December 2024.

Regulators, including central banks, continue to keep a wary eye on stablecoins. For example, a report from the Bank for International Settlements (BIS) in 2019 said: "Stablecoins have many of the features of crypto assets but seek to stablise the price of the 'coins' by linking its value [to] that of a pool of assets. Therefore, stablecoins might be more capable of serving as a means of payment and store of value, and they could potentially contribute to the development of global payment arrangements that are faster, cheaper and more inclusicve than present arrangements. 

"Yet these potential benefits can only be realised if significant risks are addressed," it said, raising questions relating to areas such as legal certainty; tax; cybersecurity and operational resilience; governance; financial stability; market integrity; and the efficiency of payments.