Hong Kong’s stablecoin will be launched at the end of the year: How can mainland institutions break through the impasse in compliance?

The formal implementation of the "Stablecoin Ordinance" in Hong Kong, China in May 2025 provides a new compliance channel for mainland institutions to explore an efficient cross-border payment system. From the current global practice, cross-border payments based on stablecoins can be achieved in seconds at the fastest. Therefore, mainland institutions have a practical need to use Hong Kong stablecoins in compliance to reduce costs and increase efficiency. We will systematically deconstruct the operating space under the dual-track regulatory framework of mainland China and the Hong Kong Special Administrative Region, analyze the implementation path of enterprise-level application scenarios, and build a full-process compliance operation guide and risk control system to provide a systematic solution for mainland institutions to achieve a dynamic balance between compliance and efficiency in cross-border financial innovation.

1. Dual-track supervision

The promulgation of the Hong Kong Stablecoin Bill marks the implementation of the world's first comprehensive regulatory framework for legal currency stablecoins, which has established market access barriers through a strict licensing approval mechanism.According to the regulations, only stablecoins issued by institutions licensed by the Hong Kong Monetary Authority (HKMA) have compliance qualifications for cross-border payments. This regulation guarantees the capital strength and compliance capabilities of the stablecoin issuers from the source. Licensed institutions such as Standard Chartered Bank and JD Technology have become the preferred partners for mainland institutions to conduct cross-border business with their perfect reserve asset custody mechanism and mature risk management system.

At the same time, the mainland regulatory system has built a regulatory framework based on trade authenticity, with the "Foreign Exchange Administration Regulations" and the "Management Measures for the Pilot Program of RMB Settlement in Cross-border Trade" as the core. The State Administration of Foreign Exchange explicitly requires that all cross-border capital flows must match the real trade background. This principle requires mainland institutions to strictly implement the "three-in-one" of contracts, invoices, and customs declarations when using stablecoins for cross-border payments, and ensure the compliance of capital flows through the integrity of the entire chain of evidence.

Under the institutional environment of dual-track supervision, the Guangdong-Hong Kong-Macao Greater Bay Area policy pilot provides a unique "sandbox environment" for the innovative application of stablecoins. The "Opinions on Financial Support for the Construction of the Guangdong-Hong Kong-Macao Greater Bay Area" clearly proposes to explore cross-border financial innovation in areas such as Qianhai, Shenzhen and Hengqin, Zhuhai. This policy breakthrough provides an institutional test field for mainland institutions. Through the pilot projects in the Greater Bay Area, institutions can accumulate valuable operational experience and lay a practical foundation for nationwide promotion and application.

II. Application scenarios

Scenario 1 is cross-border trade settlement (B2Bscenario). In traditional cross-border trade settlement, lengthy settlement processes and high exchange costs have always been the pain points that restrict the development of enterprises. The cross-border settlement system built on Hong Kong's compliant stablecoin provides an innovative solution to this problem. Its standardized operating procedures are based on blockchain technology, realizing the digitization of the entire process from order confirmation, stablecoin exchange to fund settlement.

The actual application of JD Technology JD-HKD in the cross-border supply chain has fully verified the superiority of this model. For example, the time for a certain electronics factory in Dongguan to pay the Malaysian supplier through this stable currency has been greatly shortened from the traditional 3 days to 8 minutes, and the exchange cost has dropped by 45%. This breakthrough not only improves the capital turnover efficiency of the enterprise, but also provides a strong impetus for the optimization and upgrading of the entire supply chain.

In terms of compliance operations, mainland institutions need to build a three-in-one risk prevention and control system. First, in the process of completing RMB purchases through domestic banks, the foreign exchange management quota limit must be strictly observed to ensure that the regulatory red line is not touched. Secondly, on the Hong Kong side, licensed institutions will carry out strict KYC (know your customer) and AML (anti-money laundering) reviews to control customer qualification risks from the source. Finally, blockchain technology is used to realize the full-process evidence of capital flow and logistics, and the traceability of transaction records is ensured through tamper-proof distributed accounting.

Scenario 2 is RWA (real world asset) investment. Tokenizing real world assets (RWA) and investing through stablecoins is becoming an emerging model for cross-border asset management. For example, the mainland QFLP (Qualified Foreign Limited Partner) Fund subscribes to the tokenized commercial real estate fund issued by China Asset Management with stablecoins through a Hong Kong licensed platform, realizing the digital transformation of traditional assets. This innovative model breaks the time and space limitations of traditional investment, enables assets to be traded continuously 24 hours a day after being put on the chain, and directly redeems offshore RMB when redeemed, greatly improving asset liquidity.

From the perspective of policy adaptability, this model fully complies with the requirements of the "Notice on Expanding the Pilot Program of Qualified Foreign Limited Partners". By building a closed loop of capital flow, regulators can achieve full-process penetrating supervision of capital flows and promote the innovative development of cross-border investment on the premise of ensuring financial security. This model not only provides diversified investment channels for mainland institutions, but also injects new vitality into the Hong Kong financial market.

Scenario three is cross-border payment of offshore RMB stablecoins. In view of the cross-border payment needs in the construction of the "Belt and Road Initiative", the construction of an offshore RMB stablecoin channel has significant practical significance. Mainland enterprises exchange CNH stablecoins through Hong Kong offshore RMB accounts for payment of overseas project funds. This innovative structure can effectively avoid the risk of US dollar exchange rate fluctuations. Compared with the traditional TT payment method, the settlement cost is reduced to 1/3 of the original, while the payment efficiency and transparency are greatly improved.

This model is particularly suitable for cross-border fund management of large-scale infrastructure projects. Through the price stability of stablecoins and the traceability of blockchain technology, accurate placement and effective supervision of funds are achieved. With the continuous advancement of the "Belt and Road" construction, the offshore RMB stablecoin channel is expected to become the mainstream mode of cross-border project payment, providing new impetus for the internationalization of RMB.

Third, compliance operation

Scientific evaluation system for partner selection. To build a compliant cross-border payment system, it is necessary to first establish strict partner selection standards. Licensed stablecoin issuers such as Standard Chartered Bank and JD Technology have become the preferred partners due to their direct issuance rights and compliant reserve asset custody mechanism. Licensed virtual asset platforms such as HashKey and OSL can ensure the efficiency and security of capital flow as they have been connected to the bank clearing system. Chinese banks in Hong Kong can provide precise compliance guidance to mainland institutions with their deep understanding of the regulatory requirements of both places. It is crucial to establish a partner evaluation matrix, which requires a comprehensive evaluation from multiple dimensions such as capital strength, compliance record, technical capabilities, and market reputation to ensure that the selected partners can meet the requirements of long-term compliance operations. Regular risk assessment and compliance audits of partners and dynamic adjustment of cooperation strategies are the key to building a stable cooperative relationship. Standardized process for cross-border payment filing. To ensure the compliance of cross-border payment business, mainland institutions need to establish a sound filing system. Payment instructions for cross-border business must clearly indicate the use of stablecoins to ensure that regulators can accurately grasp the nature of the business. Import and export contracts with electronic signatures are the core documents proving the authenticity of trade and need to strictly follow the relevant provisions of the Electronic Signature Law. The customs declaration number of the corresponding batch of goods is the key link in achieving the "three-in-one" and must be connected and verified with the customs system in real time. The partner license number issued by HKMA is an important proof of compliance and needs to be clearly listed in the filing documents.

By building standardized filing lists and processes, mainland institutions can effectively improve filing efficiency and reduce compliance risks. Using blockchain technology to realize digital evidence storage and intelligent verification of filing documents can further improve the automation level and reliability of the filing process.

Technical and institutional guarantees for fund flow monitoring. In terms of fund flow monitoring, the introduction of professional on-chain monitoring tools such as Chainalysis or Elliptic is a necessary technical means. These tools can achieve real-time tracking of stablecoin flows and risk warnings, and provide data support for regulatory decisions. Establishing a mechanism to trigger manual review for single transactions exceeding HK$500,000 can effectively prevent large-scale transaction risks. Submitting a monthly fund flow report to the State Administration of Foreign Exchange is an important part of fulfilling compliance obligations. The report content needs to cover comprehensive information such as transaction details, fund flows, and risk assessment.

To build a monitoring system that combines technology and systems, it is necessary to establish a cross-departmental collaboration mechanism to achieve effective linkage between business departments, compliance departments, and technical departments. By regularly conducting fund flow monitoring drills, continuously optimizing monitoring processes and emergency response mechanisms, ensure that you can respond quickly when facing sudden risks.

Fourth, Risk Control System

Identification and prevention of policy arbitrage risks.In 2024, a Shenzhen company was fined RMB 8 million by the State Administration of Foreign Exchange for transferring funds by fabricating trade contracts, which highlights the seriousness of policy arbitrage risks. In order to effectively prevent such risks, it is crucial to introduce a third-party logistics data verification mechanism. Cooperating with professional institutions such as Cainiao Supply Chain, using blockchain technology to achieve real-time chain-up and tamper-proof storage of logistics data can provide strong evidence for the authenticity of trade.

Establishing a multi-dimensional verification system for trade authenticity requires integrating multi-source data such as industry and commerce, taxation, and customs, and identifying abnormal transaction patterns through big data analysis technology. Regular internal compliance audits and hiring third-party institutions for independent assessments can timely identify potential compliance loopholes and take corrective measures.

Quantitative management of stablecoin decoupling risks. The average duration of global stablecoin decoupling events in 2023 is 37 minutes, indicating that decoupling risk is an issue that must be paid close attention to in the application of stablecoins. Choosing 100% short-term treasury bond reserve products, such as China Asset Management HKD Money Fund Token, can fundamentally reduce decoupling risks. Such products use highly liquid, low-risk short-term treasury bonds as reserve assets, which can maintain a stable anchor relationship during market fluctuations.

Establishing a real-time monitoring and emergency response mechanism for stablecoin decoupling requires setting scientific early warning indicators and thresholds. When decoupling risks are detected, the redemption mechanism can be quickly activated or converted to other stable assets to control risks within an acceptable range. Regularly auditing the reserve assets of stablecoins to ensure the adequacy and liquidity of reserves is the basis for maintaining the stability of the value of stablecoins.

Solutions to technical compliance conflicts. The institutional differences between the mainland's blockchain information service filing requirements and Hong Kong's anonymous trading licenses constitute the main conflict point in technical compliance. The use of RealDID (real distributed identity) technology can effectively resolve this contradiction and achieve the dual goals of "real name on the regulatory side - anonymity on the business side". By building a hierarchical identity management system, while meeting regulatory compliance requirements, the privacy information of both parties to the transaction is protected.

Establishing a dynamic adaptation mechanism for technical compliance requires continuous attention to changes in regulatory policies in both places and timely adjustment of technical solutions. Maintaining active communication with regulatory agencies and participating in the solicitation of opinions in the policy-making process can gain greater compliance space for technological innovation. Promote the optimization of regulatory models through technological innovation and achieve a benign interaction between compliance and innovation.

The implementation of the Hong Kong Stablecoin Act has opened a new era of cross-border financial innovation for mainland institutions, and the construction of a compliance system is the lifeline of this process. Future market competition will focus on the comprehensive control of institutions over relevant rules such as Hong Kong license management, mainland foreign exchange supervision, and technical chain compliance. Enterprises should pay more attention to the authenticity verification of digital trade, the deployment of chain regulatory compliance systems, and the continuous adaptation and integration of mainland and Hong Kong regulatory coordination, in order to occupy a strategic commanding height in the new round of cross-border payment efficiency revolution.