Stablecoins, are they really stable?
In fact, stablecoins can be divided into four categories:
1. Fiat-collateralized, such as USDT and USDC, supported by an equivalent amount of US dollars or highly liquid fiat assets;
2. Crypto-collateralized, like DAI, which locks up digital assets such as ETH through smart contracts as collateral;
3. Algorithmic stablecoins, which rely on algorithms to adjust market circulation to maintain price, with higher risks;
4. Commodity-collateralized, such as PAXG, which is linked to physical gold, with 1 coin corresponding to 1 ounce of gold.
Not all of the above four categories are stable, as the underlying collateral may not be stable, so we cannot say that "stablecoins are all stable."
However, both fiat currencies and gold will fluctuate, and stablecoins are certainly no exception. So which stablecoin is relatively stable? Let's rank them:
Stability:
Fiat-collateralized stablecoins (USD/CNY) > Commodity-collateralized (gold) > Crypto-collateralized (digital assets like ETH) > Algorithmic stablecoins
In short, it still depends on whether the collateral behind the stablecoin is stable, as well as whether the regulation behind it is strict. The stability of the collateral behind the stablecoin essentially represents the stability of that stablecoin.
The first batch of pilot stablecoins in Hong Kong is based on the most stable fiat-collateralized stablecoins, and JD.com and Ant Group have applied to enter the market.
The requirements for entering the market are also very high:
1:1 fiat reserve requirement:
- All issuers of Hong Kong dollar stablecoins must maintain a 100% equivalent fiat reserve, meaning "for every stablecoin issued, an equivalent amount of Hong Kong dollars must be deposited"
- Reserve assets are limited to cash, Hong Kong dollar/USD government bonds, central bank deposits, and other highly liquid low-risk assets, independently custodied by licensed banks in Hong Kong
- An executable 1:1 redemption mechanism must be provided, allowing users to convert stablecoins back to fiat at face value at any time
Strict capital and compliance thresholds:
- Non-bank applicants must have a paid-in capital of 25,000,000 HKD to ensure financial strength and risk resistance capability
- Issuing institutions must be registered companies in Hong Kong or recognized foreign financial institutions with a physical presence in Hong Kong
- Implement "atomic-level compliance": KYC real-name verification, transaction record retention (for over 5 years), AML/CFT anti-money laundering measures
In summary: Hong Kong stablecoins = fiat-collateralized stablecoins (HKD/USD as the anchor) + licensed financial institutions issuing + strict regulation by the Monetary Authority
Hong Kong stablecoins are truly stable.
