Hong Kong passes the "Stablecoin Regulation Bill", JD Coin Chain Technology interprets it as a "milestone moment".

On May 21, the Hong Kong Legislative Council passed the "Stablecoin Bill" (hereinafter referred to as the "Bill"). Based on this Bill, Hong Kong will officially establish a licensing system for fiat stablecoin issuers. This marks another milestone in the promotion of stablecoin issuance in the Hong Kong region.

A stablecoin is a digital currency that is pegged to certain stable assets. Due to its lower price volatility, it is more suitable for everyday transactions and payments. As of now, the United States, the European Union, the United Kingdom, Japan, and Singapore have all attempted to use stablecoins as a means of payment.

Hong Kong, as a frontier of financial innovation in Asia, announced in December 2023 that the Special Administrative Region government plans to formulate new legislation to implement a licensing system for fiat stablecoin issuers and is making continuous progress.

JD Coin Chain Technology was selected as one of the first participants in the "stablecoin sandbox" announced by the Hong Kong Monetary Authority in July 2024, and it has also become one of the most关注的企业之一.

At this milestone in industry development, Liu Peng, CEO of JD Coin Chain Technology, provides a professional interpretation of the industry significance of the passage of the "stablecoin regulation draft."

Q: What is your view on the passage of the "Regulations" and what is the significance of the legislation? What are the core contents regulated by the "Regulations"? As one of the earliest participants in Hong Kong's stablecoin issuer regulatory sandbox program, what are the next steps for JD's stablecoin?

Liu Peng: The passage of the third reading of the Stablecoin Bill marks the formal inclusion of stablecoins as a virtual asset in the legal regulatory system, and provides a good institutional environment for the healthy and sustainable development of Hong Kong's stablecoin market. As Eddie Yue, Chief Executive of the Hong Kong Regulatory Authority, said, "The Ordinance establishes a risk-based, pragmatic and flexible regulatory regime. We believe that a robust and appropriate regulatory environment can create favourable conditions to support the healthy, responsible and sustainable development of Hong Kong's stablecoin and digital asset ecosystem." It is also a major milestone event for the global cryptocurrency industry.

The Regulations provide a specific regulatory framework, which mainly includes the following aspects: first, strengthening reserve management, emphasizing that licensed issuers need to establish a robust reserve mechanism to ensure that stablecoin reserve assets are of high quality and high liquidity, and to ensure that stablecoins can be redeemed in a timely manner at par; The second is to attach importance to investor protection, and stablecoin holders have the right to redeem stablecoins from the issuer at face value, and they need to be processed within a reasonable time; The third is comprehensive risk management, complying with anti-money laundering and risk management measures, disclosure obligations, audit requirements and suitability standards for key personnel.

As a participant in the Hong Kong stablecoin issuance sandbox, JD Coin Chain will strictly adhere to the provisions of the "Regulations" and actively collaborate with global partners and regulators to implement more scenarios and build an industrial ecosystem to promote the healthy, compliant, and sustainable development of the industry.

Q: In the development of stablecoins in Hong Kong, JD Coin Chain Technology has also attracted much attention. Why is this business being developed, and what are the considerations?

Liu Peng: Under the guidance of JD Group's overseas business development strategy, our team has conducted detailed research and analysis in the Web3 field. We found that issuing payment stablecoins through blockchain technology can not only solve the problems encountered in cross-border settlements but also effectively serve other enterprises and the real economy, generating tremendous economic and social effects for both the company and society. At the same time, the Hong Kong government is also vigorously supporting the Web3 industry.

After comprehensive assessment, we initiated the license application process in Hong Kong at the first opportunity. After about a year of effort, we are very honored to have received regulatory recognition and become a participant in the Hong Kong stablecoin issuance sandbox. Currently, we are actively engaging in close communication and cooperation with the Hong Kong Monetary Authority and other regional regulators to promote the global compliant development of the JD stablecoin business.

Q: In recent years, stablecoins have gained significant attention in regions like Hong Kong and the United States. However, for the general public, stablecoins are still a relatively new concept. Could you briefly introduce what stablecoins are? What stage has the Jingdong stablecoin reached, and what value does it hold?

Liu Peng: Essentially, a stablecoin is a type of cryptocurrency that utilizes distributed ledger or blockchain technology and is pegged to fiat currency or other reserve assets.

Compared with traditional cryptocurrencies, there is a big difference, although Bitcoin and Ethereum have the ability to store value and circulate means in the five major functions of money, but this kind of asset cannot achieve the value scale and means of payment we say because of large price fluctuations, and stablecoins make up for these problems in the field of digital currency, so it has certain monetary attributes, and at the same time has the technical advantages of digital assets, so stablecoins have emerged very quickly in the field of payment, and there are more and more discussions around the world as a payment tool , the heat is getting higher and higher.

JD stablecoin is a stablecoin based on the public chain and pegged 1:1 to fiat currencies such as the Hong Kong dollar (HKD) or the US dollar (USD). The first phase is tentatively issued with stablecoins pegged to the Hong Kong dollar and the US dollar, subject to change based on regulatory and market demand. The positioning of JD stablecoin is not limited to serving JD's own ecology, but is committed to providing more efficient, economical and secure payment infrastructure for enterprises and individuals around the world. Currently, the JD stablecoin has not been officially issued and is now in the second phase of sandbox testing. We will provide mobile and PC application products for retail and institutional users. The testing scenarios mainly include cross-border payments, investment trading, and retail payments.

Among them, in the cross-border payment scenario, we have the characteristic of fast speed, with transaction times reduced from days to minutes, or even seconds; secondly, the cost is low, reducing intermediaries and transaction fees, which can save cross-border payment costs; and the experience is good, providing uninterrupted payment services throughout the year, among other advantages. This makes it very suitable for current international trade settlement applications.

In the investment trading scenario, we are collaborating with leading compliant exchanges; in the retail payment scenario, we are interfacing and testing with acquiring scenarios such as JD Hong Kong and Macau station. We also look forward to more quality partners joining in to co-build the stablecoin ecosystem and share the development opportunities of the Web3 industry.

At the same time, we would like to remind the public that the JD stablecoin has not yet been officially issued, and there is no channel to purchase the JD stablecoin. Such information is misleading and fraudulent. The public can search for "JD Coin Chain Technology" to obtain real-time updates on the JD stablecoin.

Q: What measures has JD's stablecoin taken to ensure compliance and security?

Liu Peng: Compliance and security are the basis for market acceptance and recognition of JD stablecoins, and they are also one of the advantages of our stablecoin business. We always put security, compliance and risk management in the first place, and will strictly comply with the stablecoin regulations, anti-money laundering regulations and relevant regulatory regulations in Hong Kong and other regulatory regions, ensure security and compliance through the mechanism of three lines of defense, and establish a three-dimensional risk control system covering on-chain tracking, real-time transaction monitoring, full reserve asset custody, third-party audit, smart contract audit and other measures.