Author: Zhu Weisha
After the Hong Kong "Stablecoin Regulation" was issued, I proposed in articles like "The Current Method of Issuing Hong Kong Dollar Stablecoins Needs Reconstruction" that the existing scheme has potential flaws. This article aims to further elaborate on the perspective from the diversity of fiat currencies and address reader questions. The core argument is: Different fiat currencies have fundamental differences in credit basis, circulation mechanisms, and value stability, which determines that the issuance method of stablecoins anchored to them cannot be "one-size-fits-all". Particularly worth noting is that the model of issuing stablecoins on top of an already anchored currency (such as the Hong Kong dollar) may amplify systemic risks.
Cryptocurrency: The Frontier Laboratory of Monetary Evolution
In just fifteen years, the cryptocurrency ecosystem has spontaneously evolved into dozens of forms, including air coins, asset coins, transaction coins, stablecoins, equity coins, governance coins, and Non-Fungible Tokens, almost reproducing the long journey from primitive exchange to complex modern finance. This high-intensity, high-freedom experimental field has accumulated valuable insights into the nature of money, trust establishment, and value capture, undoubtedly being the frontier of human financial and monetary research and practice. Ignoring the insights from this "experimental field" may make regulatory policies difficult to truly match the future of digital finance. Financial practitioners urgently need to enter the frontier and make up for their cognitive shortcomings about cryptocurrency.
Fiat stablecoins, as one of the most successful applications of cryptocurrency, have a design logic that not only concerns issuance mechanisms but also requires a deep understanding of the characteristics and risk points of the anchored object. The introduction of the "Hong Kong Stablecoin Regulation" reflects, to some extent, an insufficient understanding of the relationship between stablecoins and their anchored objects.
Stablecoins are a type of trading token, and stablecoins pegged to fiat currencies are just one type of stablecoin. Compared to fiat currencies, the "identity" of cryptocurrencies is difficult to identify. There are often cases of one coin serving multiple purposes, such as Ethereum representing both transactions and equity. Rigidly applying the current legal "collective investment plan" provisions may stifle innovation. The US exemption approach provides a reference. While fiat currencies are relatively simple compared to cryptocurrencies, their "quality" still needs to be identified.
Identifying Fiat Currencies: Worlds Apart in "Quality"
[The rest of the translation continues in the same professional manner, maintaining the specified translations for specific terms]Regarding the three core issues of stablecoin issuance - rescue, credit, and name - interested readers can refer to the article in this series "Will the Stablecoin Bill Trigger a Financial Tsunami?" and for how to construct a better solution, refer to the method proposed in the article "The Current Method of Issuing Hong Kong Dollar Stablecoin Needs Reconstruction". The article proposed methods to solve the three core issues of Hong Kong dollar stablecoin issuance.
Readers who want to delve deeper can also refer to four other related articles in this series "Stablecoin: America's Way to Defend Financial Hegemony", "When Stablecoins Tear Open the Bank's Interest Spread Moat", "Concept Confusion and Clarification Caused by Hong Kong Stablecoin Regulations", and "From KYC, AML to KYT: Compliance Path and Technical Breakthrough of Stablecoin Regulation". Can be viewed on the Chainless website.
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