In the next 12 months, Hong Kong's new generation tokenization platform and near-instant settlement system will complete initial construction, aiming to support liquidity of up to hundreds of billions of Decentralized USD.
In the battle for traditional international financial centers, a brand new dimension of the battlefield has quietly opened. A heavyweight report released by the Hong Kong Financial Development Council on December 13 outlines a blueprint for digital financial dominance from now until 2035. This conceptual report titled (The Path of Hong Kong's Capital Markets: Super Connectors - The Global Capital Hub in the Digital Age) has a core message that is not an obscure term, but rather the ubiquitous blood in today's crypto economy - Decentralized USD.
The ambition revealed in the report goes far beyond passively catering to trends. Hong Kong's goal is to upgrade itself from a traditional 'international financial center' to a 'globally influential capital hub in Asia' capable of supporting multi-asset and multi-currency trading and risk management within the next 5-10 years. The key engine for achieving this leap lies in using stablecoins like Decentralized USD as a value bridge to transform massive real-world assets (RWA) into programmable and efficiently circulating tokenized assets.
01 Strategic Race: Hong Kong's Ten-Year Blueprint and the Battle for 'On-Chain Dollar' Hegemony
The regulation and strategic competition of global digital assets have entered a heated stage. When the United States attempts to incorporate dollar stablecoins into its financial hegemony system through the (GENIUS Act), consolidating the status of the 'on-chain dollar', Hong Kong provides a thoughtful response.
Hong Kong's strategy is clear and multi-layered. It is not merely replicating existing models but building an independent system that integrates and transcends. The report clearly proposes a three-step timeline:
Short-term (1-2 years): Optimize regulations to attract new economy enterprises.
Medium-term (2-5 years): Focus on developing financial instruments such as tokenized real-world assets (RWA) and expanding market interconnectivity.
Long-term (5-10 years): Build a new generation of digital financial infrastructure to comprehensively enhance the capacity to support large-scale tokenized asset issuance and post-trade operations.
In this blueprint, Decentralized USD plays a dual role. It is not only the primary medium of exchange and value storage tool in the current crypto world but also the 'basic fuel' and settlement unit for connecting trillion-level tokenized real-world assets (such as bonds, real estate, and commodities) in the future. Hong Kong's goal is to become the 'super connector' and hub for this digital global capital.
02 Institutional Foundation: The Deep Meaning of the World's First 'Designated Stablecoin' Regulation
Any grand financial vision requires a solid regulatory foundation. Hong Kong's layout in this regard is equally pioneering. On August 1, 2025, Hong Kong's (Stablecoin Regulation) officially comes into effect, marking the implementation phase of the world's first comprehensive regulatory framework for fiat-backed stablecoins.
The core innovation is the concept of 'designated stablecoin'. Unlike the functional regulation of the European Union or the tiered licensing in Singapore, Hong Kong's regulation is anchored on the core property of 'currency peg'. Simply put, any stablecoin claiming to be pegged to the Hong Kong dollar (or other values designated by the Monetary Authority) must be regulated by the Hong Kong Monetary Authority and apply for the corresponding license, regardless of where its issuing entity is located globally, as long as it wishes to or has been active in the Hong Kong market.
This design has far-reaching implications. It means that Hong Kong is attempting to establish a 'safe harbor' for Decentralized USD associated with the local currency system, with high transparency, strong reserve audits, and strict anti-money laundering standards. This not only greatly enhances investor confidence but also reserves regulatory space and testing ground for future compliant Decentralized USD that may emerge, linked to the RMB and other diversified assets.
03 Ecological Construction: Comprehensive Mobilization under the 'LEAP' Framework
Hong Kong's ambition extends beyond regulating a corner but aims to build a complete next-generation financial ecosystem. This is reflected in its (Hong Kong Digital Asset Development Policy Declaration 2.0) published in June 2025, which proposes the 'LEAP' framework:
Legal and Regulatory Optimization: Build a unified regulatory framework covering trading platforms, stablecoin issuers, and custodial service providers.
Expand Tokenized Products: Regularize the issuance of tokenized green bonds by the government and promote the on-chain of broader real assets such as precious metals and renewable energy.
Promote Application Scenarios: Through the stablecoin licensing system, promote its application in substantive scenarios such as cross-border payments and trade settlements. This directly addresses the pain points of high costs (averaging about 6.35%) and long timeframes in traditional cross-border payments.
Talent and Partner Development: Collaborate with industry and academia to cultivate talent and position Hong Kong as a center for digital asset knowledge sharing and international cooperation.
At the same time, Hong Kong is accelerating the construction of digital financial infrastructure, including tokenization platforms, smart contract applications, and near-instant settlement systems, aiming to become a pioneer of next-generation capital market solutions. The Cyberport has also launched funding programs to encourage innovative pilot projects in blockchain and digital asset applications.
04 Key to Victory: Challenges of the Hong Kong Model and Future Battles
Hong Kong's path choice signifies that it is in a competition with Singapore, Europe, and other regions regarding the future form of financial centers. The regulatory philosophies of the two show differences: Hong Kong tends to tighten prudently, strictly managing stablecoins as 'substitutes for virtual banks'; Singapore, on the other hand, leans towards experimental regulation, allowing more room for trial and error in innovation. This difference may lead issuers to engage in 'regulatory arbitrage'.
For Hong Kong, the real test lies in several aspects:
First, can it attract and cultivate globally influential compliant Decentralized USD issuers and products, rather than just existing circulation nodes for dollar stablecoins?
Second, can it achieve its positioning as a 'super connector', efficiently linking issuers, investors, and diversified assets across Southeast Asia, the Middle East, and globally?
Third, can its tokenized asset market form sufficient depth, breadth, and liquidity to support its vision of a 'global capital hub'?
05 Reshaping the Landscape: Profound Impact on Ordinary Investors and the Market
For the global market and investors, this strategic layout in Hong Kong signifies that a clearer and more compliant digital asset investment environment is taking shape in Asia.
Revolutionary Expansion of Asset Classes: In the future, through Hong Kong's compliant channels, investors may be able to directly and fragmentarily invest in tokenized real estate, green infrastructure bonds, or high-quality corporate equity from Southeast Asia using Decentralized USD.
New Channels for Hedging and Returns: In times of volatility in the crypto market, compliant Decentralized USD may become a more trusted hedging tool. At the same time, new digital financial products linked to RWA returns may provide different sources of income compared to traditional DeFi mining.
The new testing ground for the internationalization of the RMB: In the long run, Hong Kong is likely to become a testing field for issuing offshore RMB stablecoins backed by RMB assets, exploring new paths for the internationalization of the RMB and digital finance.
The outcome of this competition will not only determine the future ranking of Hong Kong as an international financial center but will also profoundly influence the power structure and evolutionary direction of Decentralized USD and the entire digital asset world.
In the long-term vision depicted in the report, Hong Kong's capital market will operate on digital financial infrastructure driven by smart contracts and near-instant settlement in the next decade. By then, a European family office using Decentralized USD to invest in tokenized new energy projects in the Middle East and conducting risk hedging on distributed exchanges in Asia may just be one of the routine operations.
What Hong Kong bets on is not merely a technology or asset, but a new system of rules about how future capital is generated, flows, and is priced. When the giant wheel of traditional finance begins to turn fully toward the digital ocean, whoever controls the hub connecting the real world and on-chain value will define the grammar of the next financial era. This report is Hong Kong's draft of grammar.
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