With the implementation of stablecoin legislation, who will become the next hot spot for RWA and cross-border payments?

Author: Ying Ying, CITIC Construction Securities Research

Hong Kong's "Stablecoin Regulation" has officially become law, and the "coinage rights" of digital currencies may become a global competition focal point.On May 30, the Hong Kong Special Administrative Region government published the "Stablecoin Regulation" in the gazette, marking the formal implementation of this epoch-making digital financial regulatory law. Hong Kong has become the world's first jurisdiction to establish a comprehensive regulatory framework for fiat-backed stablecoins. This pioneering legislative initiative is seen as another major breakthrough in financial technology regulation after the launch of virtual banking licenses in 2017, which will not only further consolidate its status as an international financial center but also establish an "Eastern Standard" in global digital financial governance.

1) From the legislative process, it fully demonstrates a cautious and gradual approach.The "Regulation" was not formed overnight. In 2022, the Hong Kong Financial Authority issued a discussion document on crypto assets and stablecoins, marking the official launch of the "Regulation". The "Regulation" went through three stages: preliminary research and groundwork, gradual system construction, and draft promotion and implementation, continuously adjusting and optimizing, and finally landing on May 30, 2025, ultimately establishing a comprehensive and systematic stablecoin regulatory framework.

2) From the legislative content, the core innovation lies in strict admission, strong reserves, and guaranteed redemption.The "Regulation" adopts the "value anchoring regulation" principle, innovatively constructing a full-chain stablecoin regulatory system around regulatory authorities, regulatory objects and definitions, regulated stablecoin activities, licensing guidelines, license terms, sales restrictions, and regulatory penalty mechanisms. The core innovations mainly focus on strict admission systems, transparent reserve management, and investor protection. 1) Strict admission system: Issuers need to apply for licenses, with a minimum registered capital of 25 million Hong Kong dollars, and must prove reserve fund management and risk response capabilities. 2) Transparent reserve management: The "Regulation" implements a "100% fiat reserves + independent custody + monthly audit" regulatory mechanism. 3) Comprehensive investor protection: Unconditional redemption system allows users to redeem stablecoins at face value at any time, and issuers must process this within a reasonable timeframe or face severe penalties.

3) From the legislative impact, balanced development and opportunity seizure are emphasized.As the world's first specialized legislation for fiat stablecoins, the "Regulation" fills the regulatory gap and helps promote compliant stablecoin development. 1) Raising compliance thresholds. Implementing high-standard licensing systems (such as minimum 25 million paid-in capital and strict reserve asset requirements) helps raise market entry barriers, limiting small or emerging stablecoin issuers and screening financially sound and technically reliable participants, driving the stablecoin market towards professionalization and transparency. 2) Enhancing investor confidence. The "Regulation" effectively reduces fraud and market risks through strict licensing, reserve asset management, and penalty mechanisms. For instance, only licensed institutions can offer stablecoins to retail investors. 3) Seizing global stablecoin development opportunities. As the regulatory framework improves, stablecoins are moving from a niche tool in the crypto world to the mainstream financial stage, potentially becoming the infrastructure of the next-generation financial system. The "Regulation" indicates Hong Kong's intention to occupy an important position in the global stablecoin market.

4) From global competition, gaining rule-making rights may provide an advantage in future monetary system reshuffling.Besides Hong Kong, the United States, European Union, Africa, and other regions are engaged in fierce competition for stablecoin dominance. The US "GENIUS Act" attempts to incorporate stablecoins into national strategic tracks to consolidate the US dollar's dominance in the global monetary system, requiring stablecoin legislation to be deeply linked with Treasury bond demand. The EU's "Crypto Assets Market Regulation Act" seeks to redefine the digital financial order through a unified regulatory framework. African stablecoins are primarily positioned as "financial empowerment tools" to help people combat inflation and currency depreciation. In the future, gaining digital currency "coinage rights" rule-making power may provide an advantage in the future monetary system reshuffling.

The stablecoin market is growing rapidly, with cross-border payment application scenarios continuously increasing in activity. 1) In terms of market scale, the stablecoin market is growing quickly, with a growth of over 1100% in 5 years. According to Deutsche Bank data, the total stablecoin market value was about $20 billion in 2020, and by May 30, 2025, it had soared to $249.7 billion, an increase of over 1100% in about 5 years. Among them, Tether (USDT, 1:1 pegged to the US dollar) launched in 2014 accounts for over 60% of the stablecoin market, followed by USDC (over 24%). Additionally, stablecoins dominate trading, with a trading volume of $28 trillion in 2024, exceeding the total of Visa and Mastercard, supporting over one-third of cryptocurrency transactions. 2) In terms of market competition, the stablecoin market is highly concentrated, mainly dominated by fiat-backed stablecoins like USDT, USDC, TUSD, and BUSD, occupying over 90% of market share. USDT leads with $144.6 billion in issuance (59%), while USDC has $60.6 billion (25%) with significant growth (35%). Stablecoin market concentration continues to increase, with a pronounced head effect. 3) In terms of application scenarios, stablecoins' activity in cross-border payment settlements is continuously rising. Stablecoin application scenarios are expanding, mainly including crypto asset trading, cross-border payments, DeFi innovative scenarios, and value storage. Cross-border payment settlement activity is particularly increasing, with Castle Island Ventures and Brevan Howard Digital's (2024) calculations showing that stablecoin payment settlement volume reached about $2.5 trillion in the 12 months before May 2024, 10 times its 2020 settlement volume.

Stablecoin legislation will help accelerate large-scale RWA application, with the RWA market size expected to soar to $16 trillion by 2030. Compliant and transparent stablecoins are expected to play an indispensable "engine" and "cornerstone" role in the RWA ecosystem, constructing a compliant and trustworthy basis for RWA financing while significantly reducing costs and improving efficiency. This will accelerate the process of converting various real-world assets into digital tokens through blockchain technology, potentially supporting large-scale RWA applications. In recent years, multiple countries like the US, Japan, and Singapore have been actively exploring RWA innovative applications, with giants like Goldman Sachs, BlackRock, Ant Group, and JD.com entering the field to seize RWA development opportunities. In October 2022, Hong Kong released the "Virtual Asset Policy Declaration", establishing RWA's strategic position; in March 2024, the Hong Kong Monetary Authority launched the Ensemble project, covering four major themes including fixed income and investment funds, liquidity management, green and sustainable finance, and trade and supply chain finance, already forming numerous RWA benchmark cases. For example, in August 2024, Longi Group collaborated with Ant Digital and UBS (main underwriter) to complete a cross-border RWA case for new energy assets, anchoring the operating revenue rights of 9,000 charging piles, raising 100 million yuan in funds.

As of June 2, 2025, the total value of on-chain RWA is $23.1 billion (excluding stablecoins), with a year-on-year growth of over 110%. Among them, private credit is $13.4 billion, U.S. Treasury bonds are $7.2 billion, and commodities are $1.5 billion. According to BlackRock's prediction, the RWA market size will surge to $16 trillion by 2030. With the continuous deepening of RWA development, issuers, custodian banks, investors, and blockchain entities in the RWA ecosystem are expected to rapidly expand, and investment opportunities may emerge in areas such as RWA asset operations, banking IT, and cross-border payments.

Summary:

Hong Kong's "Stablecoin Regulation" has officially landed, and the outlook is positive for stablecoins and RWA to accelerate into a new stage of development. On May 30, Hong Kong's "Stablecoin Regulation" became the world's first specialized legislation targeting fiat stablecoins, effectively filling the regulatory gap and accelerating the compliant development of stablecoins. Hong Kong has officially become the first jurisdiction to establish a comprehensive regulatory framework for fiat stablecoins. Meanwhile, the United States, European Union, Africa, and other regions are engaged in fierce competition for stablecoin dominance, aiming to gain an advantage in the future monetary system reshuffling. The stablecoin market size is growing rapidly, with a five-year increase of over 1,100%, and the activity of cross-border payment application scenarios continues to rise. At the same time, the landing of stablecoin legislation is conducive to accelerating the large-scale application of RWA, with the RWA market size expected to surge to $16 trillion by 2030. As RWA continues to develop deeply, issuers, custodian banks, investors, blockchain, and other RWA ecosystem entities are expected to rapidly expand, and investment opportunities may emerge in areas such as RWA asset operations, banking IT, and cross-border payments.