As stablecoins grow, Hong Kong's US dollar peg seen as advantage despite Web3 challenges

Stablecoin transactions are now a fifth of all cryptocurrency transactions, and they make it easier to transact in US dollar-backed assets

Hong Kong’s unyielding optimism towards Web3 despite the challenges is no secret, and the city-state appears to be reaping the benefits of its enduring faith in the U.S. dollar, especially as stablecoin transactions now comprise a fifth of all cryptocurrency transactions.

The Hong Kong dollar’s peg to the U.S. currency is a unique advantage for the city, as the majority of stablecoin trading activity happens through cryptocurrencies backed by the U.S. dollar. This can help smooth out business operations for companies whose main asset holdings are also pegged to the USD, including the largest stablecoins Tether (USDT) and Circle’s USD Coin (USDC).

“Hong Kong has long been a global financial hub with a deep and liquid foreign exchange market, supported by a regulatory environment that facilitates currency conversion,” said David Katz, the Asia-Pacific vice-president of strategy and policy at Circle. “Its peg to the U.S. dollar and strong banking infrastructure make it an attractive location for USD conversions.”

“The reality is everybody, everywhere in the world – China and everywhere else included – wants dollars,” said Chris Maurice, CEO of the Africa-focused stablecoin exchange Yellow Card. “This is why you have U.S. dollar 200 billion now in market cap in USD stablecoins.”

The potential of this new financial technology is immense, especially in economically developing nations like those in Africa, Maurice added.

“We can create a future where people in any corner of the globe can seamlessly access and utilize the world’s leading cryptocurrency in a compliant and efficient manner, regardless of their location or the local currency they hold,” said Katz.