First-mover advantage key to Hong Kong’s success in multicurrency stablecoins

Hong Kong has a “huge opportunity” to become a global finance hub for multicurrency stablecoins but being a “first mover” in the market would be key to success, according to PwC.

“From an ecosystem perspective, having stablecoin issuers is just the first part of the puzzle,” said Peter Brewin, partner at PwC Hong Kong. He predicted a world with “multiple stablecoins in different currencies and with differing global footprints in terms of usage and acceptability”.

For example, a supplier in Latin America or Southeast Asia may not want to be paid in stablecoins pegged to Hong Kong dollars, but companies in Hong Kong may not want to hold inventories of multiple foreign stablecoins on their balance sheets, he said.

As such, the world needs a stablecoin finance hub where associated forex, derivatives, borrowing and lending in the assets are centralised and where liquidity pools could develop to service the needs of international trade, according to Brewin.

“This is a huge opportunity for Hong Kong and is one where being a first mover could be key,” he said.

Hong Kong’s niche in stablecoins was in a multicurrency approach, Hong Kong Financial Secretary Paul Chan Mo-po wrote in his official blog in June. The Hong Kong government has adopted an open model of allowing licensed issuers to peg their stablecoins to different fiat currencies. This would attract a diverse array of worldwide institutions to issue stablecoins in Hong Kong, enhancing liquidity and the competitiveness of the local market.