Hong Kong to Kickstart New Web3 and Digital Yuan Initiatives This Year

The city of Hong Kong has detailed the advancement of new Web3 and digital yuan initiatives as part of its 2024-2025 budget. In a speech, Hong Kong Financial Secretary Paul Chan stated that the city would expedite a Web3 sandbox for stablecoins and expand the digital yuan pilot as part of its digital finance policies.

Hong Kong to Launch Web3 Stablecoin Sandbox and Digital Yuan Pilot Expansion

Hong Kong announced a series of new actions and policies it will adopt in 2024. In a speech offered by Financial Secretary Paul Chan, it was explained that the extension of these policies would be focused on accelerating the promotion of high-quality development of the city’s digital economy.

Chan announced that the new phase of the e-HKD, its central bank digital currency (CBDC), would explore new use cases, apart from programmable payments, offline payments, and tokenized deposits that were studied during its first phase. Also, the city will expand the scope of the digital yuan pilot in Hong Kong.

On this subject, Chan explained that citizens will create digital yuan wallets funded by the Faster Payment System (FPS), a use case previously tested during the 19th Asian Games in October. He emphasized this would enhance “the efficiency and user experience of cross-boundary payment services.”

Furthermore, Chan also revealed that the city would enable a sandbox for institutions to experiment with issuing stablecoins, to safeguard financial stability without compromising innovation. This sandbox will enable its participants to make trials to test the “issuance process, business models, investor protection, and risk management systems” of stablecoins. It will also be relevant in the conversations for the future regulation of these assets.

In January, the city was preparing to strengthen the oversight of cryptocurrency over-the-counter (OTC) markets. According to Under Secretary for Financial Services and the Treasury Joseph Chan Ho-lim, Chinese mainlanders continue to use these platforms as a bridge to invest in cryptocurrency assets.

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