Stablecoin vs Cross-border payment channels, "competitors", "alternatives" or each doing well on their own?

Written by: Xiao Za Legal Team

Recently, thanks to the positive signals released by regulators, various major companies have announced their plans to enter the "stablecoin" space. Overnight, this concept, which was once closely tied to cryptocurrencies and often associated with money laundering, cross-border cybercrime, and similar news, has rapidly become a new "hot spot" in both the crypto industry and traditional finance, attracting widespread interest.

But coincidentally, on June 22, 2025, with the joint promotion of the People's Bank of China and the Hong Kong Monetary Authority, the Cross-Border Payment System officially went live. The institutional barriers between Hong Kong and the mainland have collapsed, and the convenience reform of instant small transfers has allowed the public to truly experience benefits and convenience. Since the Cross-Border Payment System is so useful, do we still need stablecoins?

Today, Sister Sa's team will discuss in detail with our partners the similarities and differences between "stablecoins" and traditional financial payment tools, as well as whether they are in a "competitive" relationship.

01 Clarification of Two Concepts

First of all, what is a stablecoin? In the simplest terms, a stablecoin is a type of cryptocurrency issued by specific organizations or individuals, backed by a certain country's fiat currency as the underlying asset (value basis). Technically, it is not much different from cryptocurrencies like BTC and ETH, but it excels in being publicly priced, transparent, and stable without fluctuations, serving as a "general equivalent" in the crypto world, acting as a payment tool or a value measurement tool. Therefore, partners can actually view stablecoins as a special type of non-legal "currency."

Second, what is Cross-Border Payment Link? In simple terms, the Cross-Border Payment Link refers to the "combination" of the Mainland Online Payment Interbank Clearing System (IBPS) and the Hong Kong Faster Payment System (FPS). By connecting the two, it can solve the problem of cross-regional fund payments at the lowest cost. For example, partners can now use the Cross-Border Payment Link to directly achieve small transfers without converting Renminbi into Hong Kong dollars. Remittances that used to take half a day to arrive can now basically be credited in seconds, significantly reducing transaction and payment costs.

Currently, according to news from the Hong Kong Securities and Futures Commission, stablecoins are still in the testing phase, and no issuer has successfully exited the sandbox and entered the global market. In other words, compliant and regulated stablecoins are still in the early stages of development. In contrast, cross-border payment channels have already brought real convenience to the public, and many partners will be able to use them soon.

02 Stablecoins vs Cross-border Payment Channels, are they "competitors"?

This is one of the most frequently asked questions by partners to the Sa Jie team recently. Although both serve as payment methods and tools in practical terms, they are fundamentally different, and there are significant differences in their future development and application scenarios.

In essence, as mentioned earlier, stablecoins are essentially a type of "general equivalent", a special form of non-legal "currency"; while cross-border payment systems are a convenient payment system developed based on the existing legal currency system for cross-regional (Mainland China and Hong Kong) transactions. Therefore, simply put, the two are not "competitors", but in terms of application scenarios, there is indeed some overlap.

Currently, the application scenarios of cross-border payment channels are mainly as follows:

Residents in the mainland can remit funds to bank accounts in Hong Kong, choosing to remit in RMB and receive in RMB or HKD, commonly known as the "Southbound Remittance Facilitation Service".

The "Northbound Convenient Remittance Service" for Hong Kong residents to remit to mainland bank accounts can be initiated in Hong Kong dollars or Renminbi, with Renminbi being credited.

Individuals and legal entities, as well as institutions, can choose bilateral local currency or bilateral RMB remittances, commonly known as "two-way cross-border RMB payment services". For example, if Lao Wang wants to pay tuition for his son studying at the University of Hong Kong.

The Sajia team would like to remind you that there are limits on remittances; only small remittances can be processed. For the situation from Hong Kong to mainland China, the remittance limit is HKD 10,000 per person per day at each bank, and HKD 200,000 per person per year at each bank; for remittances from mainland China to Hong Kong, it is calculated according to the current personal annual foreign exchange purchase limit of USD 50,000 (which is restricted within the foreign exchange control limit).

As for stablecoins, currently the three companies in the Hong Kong regulatory sandbox have not disclosed much information, and their application scenarios are also different. Taking the collaboration of Animoca Brands, Standard Chartered Bank, and Hong Kong Telecom as an example, they have already entered the later stage of sandbox testing, primarily issuing stablecoins pegged to the Hong Kong dollar.

03 Some Latest News and Policy Judgments on the Hong Kong Stablecoin License Application

Since the Hong Kong Special Administrative Region's "Stablecoin Regulation" has been implemented and will take effect on August 1, the Sa Jie team has received a large number of inquiries about how to apply for a license. In fact, there is no need for partners to panic; although the Hong Kong Monetary Authority will start accepting license applications after August 1, this time the license will not be on a first-come, first-served basis, but rather awarded to those who are "trustworthy."

Firstly, the number of licenses proposed to be granted this time is extremely limited, possibly only in single digits. The Monetary Authority has provided a clear regulatory approach and positioning: stablecoins are not tools for investment or speculation, but rather one of the payment tools utilizing blockchain technology (positioned as financial infrastructure), and they do not have appreciation potential in themselves. In other words, whether a license can be issued depends crucially on whether the applicant has the capability and intention for long-term large-scale investment in infrastructure construction, and whether they can provide sufficiently reliable application scenarios to impress the Monetary Authority.

Secondly, the three entities that have already entered the sandbox are undoubtedly ahead, but this does not mean that entering the "sandbox" in the future is a prerequisite for obtaining a license, nor does it mean that the participating institutions that have entered the "sandbox" will necessarily obtain a license.

In summary, the opportunities presented by the times may only come once. The Sa Sister team does not recommend rushing without being fully prepared; sharpening the axe does not hinder the work of chopping wood. The issuance of stablecoin licenses will inevitably go through a long assessment period, and as long as one is sufficiently "reliable," being a latecomer does not mean it is impossible to take the lead.

04 Written at Last

Many partners are asking what specific conditions need to be met to apply for a stablecoin license? What are the specific procedures? In fact, the Monetary Authority has not provided a clear guideline at this time. According to insights from the Sajia team, the guiding documents are still in the consultation phase, so partners should pay close attention.

So, at this stage, if you want to prepare in advance, is there a reference standard? Of course, there is. The regulatory authority in Hong Kong has made it clear that the model for regulating stablecoins in Hong Kong comes from the section on stablecoins in the "Global Regulatory Framework for Crypto-Asset Activities" published by the Financial Stability Board (FSB) under the G20 in 2023. Therefore, at this stage, if partners want to prepare in advance, it is recommended to refer to this standard to advance specific compliance work.