Exclusive interview with Yuancoin CEO: Hong Kong dollar stablecoin will not compete with US dollar stablecoin for the market

Author: Jessy, Golden Finance

On July 18, the Hong Kong Monetary Authority announced the first batch of companies to enter the stablecoin sandbox: JD CoinChain Technology (Hong Kong) Co., Ltd.; Yuanbi Innovation Technology Co., Ltd. (hereinafter referred to as Yuanbi Technology); and Standard Chartered Bank (Hong Kong) Limited, Anni Group Limited, and Hong Kong Telecommunications (HKT) Limited.

Yuanbi Technology, one of the three companies, currently has two major businesses: "Yuanbi Wallet" and "Hong Kong Dollar Stablecoin" that support digital legal currency payments. Its team has rich traditional financial experience and mainland background. It was founded by former Hong Kong Monetary Authority President Norman Chan and serves as chairman of the board of directors. The other six directors are ZhongAn Online Chairman Ou Yaping, ZhongAn International President Xu Wei, HashKey Group Chairman Xiao Feng, Dragonfly Capital Managing Partner Feng Bo, Boqi Environmental Protection Non-Executive Director Zheng Tuo and Yu Fanyun.

When Yuanbi Technology was first established, its vision was to support cross-border payments for enterprises. This payment tool was previously legal currency. With the development of Web3, cross-border payments are increasingly using stablecoins. The launch of the Hong Kong dollar stablecoin is not only an advocacy of the Hong Kong government, but also an initiative that is in line with the business development plan and interests of Yuanbi Technology.

Golden Finance interviewed Rita Liu, CEO of Yuanbi Technology. In the interview, Rita Liu detailed the actual use cases of the Hong Kong dollar stablecoin planned by Yuanbi Technology, the development progress of the Hong Kong dollar stablecoin, and the issues that the Hong Kong government is most concerned about in the Hong Kong dollar stablecoin.

Whether it is for a company or a government, launching a stablecoin is a move to keep up with the development trend of global finance. In the view of Yuanbi Technology, the Hong Kong dollar stablecoin will not compete with the US dollar stablecoin for the market in the future, but in the process of connecting Web2 and Web3, together with various stablecoins, it will broaden the application scenarios of stablecoins and expand the overall market.

The following is the transcript of the interview:

Golden Finance: When did Yuanbi Technology apply to enter the sandbox? What is the reason why Yuanbi Technology can enter the sandbox this time? What points do you think the HKMA values ​​when reviewing companies entering the sandbox?

Rita Liu: After the HKMA announced in March that sandbox applications could be made, we submitted an application as soon as possible. In fact, before March, we had already made a lot of preparations for the Hong Kong dollar stablecoin business.

This time, 108 institutions have done the HKMA's consultation, which shows that the Hong Kong dollar stablecoin is very popular, but we don't know how many institutions have formally submitted applications. Yuanbi Technology is fortunate to be one of the three companies approved for the first time, which shows that Yuanbi Technology's understanding of the stablecoin business and its response strategy, risk control, and technical capabilities have been recognized by the HKMA.

Yuanbi Technology must have met the requirements listed by the HKMA regarding systems, technology, risk control, and business capabilities. In addition, the HKMA also values ​​whether a company has a strategy to make this successful when doing the Hong Kong dollar stablecoin, rather than just applying for a license for the sake of applying for a license.

Golden Finance: Can you briefly introduce Yuanbi Technology's business?

Rita Liu: Yuanbi Technology currently has two major businesses, one is the Hong Kong dollar stablecoin, and the other is the Yuanbi wallet. From the beginning, we hope to help Hong Kong consolidate its position as a financial center. At present, our vision is to link Web2 and Web3. At present, Web3 needs to keep its vitality and bring in the real economy.

Yuanbi Wallet provides users with a multi-currency fiat account, while the Hong Kong dollar stablecoin actually uses blockchain to achieve cross-border payments. The two can actually be well linked and integrated to achieve our vision.

Golden Finance: What are the main application scenarios of the Hong Kong dollar stablecoin launched by Yuanbi Technology?

Rita Liu: The first scenario is the currency-to-currency transaction itself. With the compliance of global exchanges, compliant stablecoins have a large market in compliant exchanges;

The second scenario is cross-border payments and cross-border trade. Hong Kong itself is a traditional trade center, and a large amount of global trade is currently settled in stablecoins. This is because stablecoin settlement coins are faster and more convenient than traditional payment channels, especially in some financially underdeveloped regions, where traditional payment channels are slow and opaque. Therefore, stablecoins themselves have great potential in cross-border payments and clearing, and Yuanbi Technology hopes to expand in this area;

The third market is in tokenized assets, where compliant stablecoins play an intermediary role. At present, there are many discussions and attempts on the tokenization of traditional assets in the world and Hong Kong, and there are many opportunities.

In order to build an ecosystem for the three scenarios, Yuanbi Technology has made a lot of preparations. Many compliant exchanges around the world are interested in our stablecoin project, and we are also negotiating cooperation intentions with many payment companies.

Golden Finance: Can the current business of Yuanbi Wallet be a good bridge with the Hong Kong dollar stablecoin? Can a deposit and withdrawal channel from fiat currency to Hong Kong dollar stablecoin be opened on Yuanbi Wallet?

Rita Liu: Yuanbi Wallet has obtained a stored value payment license, similar to the license obtained by Octopus and Alipay in Hong Kong. We are the only licensed institution that does To B business. The business of Yuanbi Wallet is to open accounts for global enterprises remotely electronically based in Hong Kong and help them make cross-border payments. There are currently eight fiat currencies in the wallet. Some small and medium-sized enterprises that have difficulty opening accounts are the main customers of Yuanbi Wallet.

Stablecoins and Yuanbi Wallet actually have a high degree of overlap in the application scenario of customers and cross-border payments. The current customer base of the wallet can be easily converted into the customer base of stablecoins in the future. This is a major advantage of Yuanbi Technology as a stablecoin issuer.

The deposit and withdrawal of fiat currency to Hong Kong dollar stablecoin is actually another business. This may require us to cooperate with compliant exchanges or obtain compliant OTC licenses. We need to pay attention to the progress of regulations in this regard before making decisions.

Golden Finance: What is the expected progress of Hong Kong dollar stablecoins this year?

Rita Liu: At present, the three companies that have been announced to enter the sandbox can start trial and error under the guidance of the HKMA.

We will soon be able to truly implement some business scenarios while balancing risks and business development. Although it is a testing phase, real stablecoins will be issued at this stage.

In the summary of the consultation opinions issued two days ago, it can be seen that the HKMA is also making a lot of preparations for the legislation of Hong Kong dollar stablecoins, but the Legislative Council has a certain process. (Golden Finance Note: Chen Weimin, deputy director of the Hong Kong Monetary Authority, issued a document on July 18 saying that the authorities are implementing a stablecoin issuer supervision system in Hong Kong, fully advancing the drafting of laws, and striving to submit the relevant draft bill to the Legislative Council for deliberation before the end of the year.)

Golden Finance: When communicating with the HKMA, what did you find that they were most concerned about in terms of Hong Kong dollar stablecoins? What are their concerns?

Rita Liu: The HKMA focuses on the balance between risk control and business expansion.

The background for institutions to do Hong Kong dollar stablecoins is what Hong Kong said in its declaration issued at the end of 2020 to be the center of global Web3. The development in the past two years has been somewhat circuitous, but overall, many laws and regulations have been implemented, and there are many companies that have developed in compliance. I think the regulators are very eager to create a good environment for everyone to develop Web3.

At present, the lack of supervision will hinder the development of the industry. The regulators hope that everyone will develop their businesses in compliance with regulations. For these companies selected for the sandbox, the regulators are not only looking at the ability to control risks, such as not to produce anything that threatens the security of the financial system, but also whether there are corresponding landing strategies.

The process of the actual landing of the Hong Kong dollar stablecoin requires a certain amount of time for the regulators and the market to understand each other. We need to communicate more with the regulators. Moreover, the blockchain itself has many advantages, such as its transparency and traceability, and it has advantages in combating crime and anti-money laundering, which is also what the regulators are optimistic about.

Golden Finance: The US dollar stablecoin has already occupied a very high market share in the crypto world. How can the Hong Kong dollar stablecoin compete with it? What specific plans does Yuancoin have to seize market share?

Rita Liu: I think the Hong Kong dollar stablecoin is not in competition with the existing stablecoins, and the pie can be made bigger. The total market value of stablecoins now exceeds 160 billion US dollars. Although it looks big, it is still small compared with the traditional payment market and financial market.

Many peers are calling for the launch of various legal currency stablecoins. For example, if we can put the foreign exchange market on the chain, we can increase the settlement speed, reduce friction, and reduce dependence on the traditional legal currency system. The launch of various legal currency stablecoins can form an on-chain foreign exchange market.

Some stablecoin issuers in the industry have a consensus that within five years, the market is likely to reach 3 trillion US dollars. Stablecoins can bring more traditional financial market volume into Web3. If Yuanbi Technology can bridge Web2 and Web3 well, it will expand a huge market.

Golden Finance: What is the difference between digital Hong Kong dollars and Hong Kong dollar stablecoins?

Rita Liu: Digital Hong Kong dollar is what we often call central bank digital currency. It is carried on a more centralized chain and is a wholesale digital currency for financial activities of financial institutions in various countries. The Hong Kong dollar stablecoin is carried on a decentralized chain, corresponding to private financial activities. The two scenarios coexist because they serve different customer groups.

Golden Finance: What has the launch of the Hong Kong dollar stablecoin brought to the Hong Kong dollar and Hong Kong?

Rita Liu: Based in Hong Kong to make Hong Kong dollar stablecoins, Hong Kong dollar stablecoins have achieved certain achievements in the Web3 world, which can promote the Hong Kong dollar and even Hong Kong to stand at the bridgehead of the development of the Web3 era.

We often say that we should care about the financial needs and concepts of the younger generation, how they view wealth, how they view money, and how they invest? What role should the Hong Kong dollar and Hong Kong play in the Web3 era? How can Hong Kong consolidate its position as a financial center? The Hong Kong dollar stablecoin undoubtedly plays an important role in answering these questions.