The "Veteran" of the Payment Industry Explores New Routes for Stablecoins

In 2011, Liu Peng, a team member of "a certain payment platform," purchased his first Bitcoin, exploring with skepticism whether this cryptocurrency without a pegged asset truly had value. More than a decade later, he led his team to study stablecoins, but the goal was to issue rather than purchase.

In early June this year, Liu Peng, CEO of JD Coin Chain Technology, emphasized in an interview that stablecoins are different from cryptocurrencies like Bitcoin and Ethereum, and are more similar to mobile payments, essentially being a "payment tool." As a veteran in the payment industry, Liu Peng has been deeply involved in the design and promotion of a well-known payment product, and has since been responsible for payment business in several large enterprises. Now, he states that he feels a similar atmosphere to the eve of the explosion of mobile payments, believing that payment-type stablecoins will become the new financial infrastructure of the Web3 era, playing a disruptive role in international trade and other fields.

Stablecoins, with advantages such as decentralization, low-cost transfers, and transparent traceability of transactions, are transitioning from the crypto world to a broader traditional financial system. On May 30 this year, Hong Kong officially enacted the "Stablecoin Ordinance," marking the international financial center's commitment to regulate stablecoin activities related to Hong Kong and the Hong Kong dollar through a licensing system. As early as last December, Hong Kong announced the implementation of a licensing system for fiat stablecoin issuers; in July this year, three institutions, including JD Coin Chain, entered the stablecoin issuer sandbox launched by the Monetary Authority to conduct relevant tests.

Liu Peng revealed that the JD Coin chain's scenario testing in the sandbox is progressing smoothly, with plans to launch stablecoins pegged to the Hong Kong dollar and other coins.

JD Coin Chain was registered in Hong Kong in March this year and is affiliated with JD Technology Group. Although it has been established for a short time, Liu Peng believes that one of JD Coin Chain's first-mover advantages is having a "cold start" scenario from zero to one, namely the JD e-commerce ecosystem. He mentioned that if compliant stablecoins are issued, the vast number of merchants on the JD platform can use stablecoins for upstream and downstream settlements to improve efficiency and manage funds more flexibly overseas.

In a market where USDT and USDC account for over 80% of dollar stablecoins, licensed issuers in Hong Kong need to find other attractions, including use cases, in addition to the "compliance" advantage of the stablecoins they issue. Among these, cross-border payments are undoubtedly a key area of focus for many stablecoin issuers. At the same time, retail payments also have positive significance for increasing the market penetration and brand building of stablecoins.

Starting from August 1 this year, the "stablecoin regulations" will officially take effect. Globally, regions such as Singapore, the European Union, and the United States have successively included payment-type stablecoins under regulation, and this existing stablecoin market, which is approximately $250 billion in size, is becoming increasingly popular.

In the future, will compliant stablecoins drive a shift in the payment paradigm, further advancing the previous "offline to online" mobile payments to "online to on-chain"? Can Hong Kong, which prioritizes regulation, leverage stablecoins to consolidate and enhance its key position in international trade? In an era where multiple currencies are pegged to stablecoins, how will the global payment and financial systems change? These questions are worth our continued attention.

Testing Progress and Future Plans for JD Stablecoin

As of early June, JD Coin Chain mainly conducted tests of the Hong Kong dollar stablecoin, and will later test other fiat stablecoins. Based on market demand, it is expected that the two stablecoins will be issued simultaneously. The second phase of testing focuses on the application of stablecoins in three practical scenarios: cross-border payments, investment trading, and retail payments.

In terms of cross-border payments, we plan to expand our user base through both direct and indirect customer acquisition methods. In investment trading, we are currently negotiating partnerships with global compliant exchanges, aiming to launch the JD stablecoin in different regions. In retail, we will first implement it in the JD Global Sale Hong Kong and Macau stations, allowing users to be the first to use stablecoins for shopping in JD's self-operated e-commerce scenarios.

JD Coin Chain expects to obtain a license in early Q4 of this year and simultaneously launch the JD stablecoin. The stablecoin will be issued on a public blockchain, and anyone can publicly access data such as the issuance volume.

Market Positioning and Competitive Strategy of Compliant Stablecoins

As a newly issued compliant stablecoin, the JD stablecoin's goal is not to compete in scenarios such as native cryptocurrency or investment trading, but to explore a new "battlefield", namely connecting the traditional cross-border trade settlement market. This market has a large number of实体企业, cross-border trade participants, payment technology companies, etc., who need safe, compliant, and transparent audit-able stablecoin services.

The competitiveness of JD's stablecoin lies not only in low costs, high efficiency, and excellent experience, but also in a stable custody mechanism, secure clearing and settlement channels, and reliable operational logic to protect the rights of holders. As a stablecoin issuer, JD Coin Chain is also willing to collaborate with cross-border payment companies to build a stablecoin ecosystem.

Application of Stablecoins in the JD Ecosystem

Within the JD ecosystem, the global sales and order receiving scenarios for Hong Kong and Macau will first use JD stablecoin for payment settlement. Outside the ecosystem, there are plans to develop "tailored" stablecoin payment solutions for different industries. The transfer time for JD stablecoin will be reduced from several days to seconds, with costs at least halved compared to traditional transfers, and on-chain capital turnover will also be faster. These advantages are expected to attract international trade participants.

In terms of supply chain financial services, JD Coin Chain will explore cooperation with licensed institutions that have the relevant qualifications. We are currently sorting out the scenarios of JD International Logistics. Theoretically, with the authorization of all parties, small and medium-sized enterprises going abroad can put data such as overseas warehouse orders on the blockchain and use stablecoin for payment and financing, improving the efficiency of the entire process.

Comparison of Stablecoins and Mobile Payments

Liu Peng emphasized that payment stablecoins are completely different from cryptocurrencies like Bitcoin and Ethereum. Stablecoins, like mobile payments, are essentially payment tools aimed at reducing costs and increasing efficiency through advanced technology and business models, enhancing user experience, and promoting inclusive financial development.

On a technical level, stablecoins are based on a decentralized technological architecture, while mobile payments are centralized; on the product structure level, stablecoins have an issuance system that traditional payment products lack. Therefore, the regulation of stablecoins is relatively complex and requires collaboration for global compliance.

The Integration of Stablecoins and Traditional Financial Infrastructure

From a B2B perspective, bulk trading may be the first to adopt stablecoins, especially in cross-border payment scenarios where friction costs are high, exchange rate fluctuations are large, and the time is extended; from a B2C perspective, to fully stimulate users' motivation to use stablecoin payments, it may require a phenomenal product and application similar to the red envelope feature in a well-known payment platform.

Improvement of the Hong Kong Stablecoin Industry Ecosystem

The key is to establish a risk-based, pragmatic, and flexible open ecosystem in accordance with the requirements of the "stablecoin regulations," where regulators, issuers, wholesalers, scenario providers, users, and investors must cooperate with each other. It is necessary to seize the breakthrough of capital settlement, leveraging Hong Kong's role as an international financial center and trading hub, to expand the circulation and usage of stablecoins issued in Hong Kong across multiple regions, further transforming Hong Kong into an international stablecoin settlement hub.

The Possibility of Offshore Renminbi Stablecoin

In terms of product technology, there is not much difference between issuing offshore RMB stablecoins and Hong Kong dollar stablecoins. The potential application scenarios for offshore RMB stablecoins are already in place, such as the Belt and Road Initiative. JD Coin Chain supports and promotes the future issuance of offshore RMB stablecoins, but comprehensive considerations from the perspective of legal compliance and other aspects are necessary. Ultimately, whether it can be implemented still depends on mainland regulation.