What Are Stablecoins and Why Are They Surging?
The financial world is abuzz with the recent surge in stablecoin-related stocks following regulatory advancements in Hong Kong. Stablecoins—a type of cryptocurrency pegged to stable assets like fiat currencies or commodities—aim to reduce the volatility common in traditional cryptocurrencies like Bitcoin.
Key Developments Driving the Market:
- Hong Kong’s Stablecoin Ordinance: Enacted on May 30, 2025, this legislation establishes a licensing framework for issuers of "fiat-backed stablecoins," enhancing regulatory clarity.
- Global Legislative Momentum: The U.S. and U.K. are also progressing with stablecoin-related bills, signaling broader adoption.
Market Impact and Volatility
Companies like LianLian DigiTech (Hong Kong-listed) saw dramatic stock swings:
- June 2, 2025: Shares surged 64.27% to HKD 16.46.
- June 3, 2025: Prices corrected sharply, falling 39.25% to HKD 10.00.
Similarly, A-listed stocks such as YuYu Corp, Hengbao Tech, and Cuiwei Holdings hit涨停 (up-limit) on June 3.
Why the Frenzy?
- LianLian DigiTech holds a Virtual Asset Trading Platform (VATP) license in Hong Kong and partners with Sandbox participants like RD Tech to advance enterprise-grade wallet solutions.
- Revenue Growth: The company reported a 64.7% YoY increase in total payment volume (2024), reaching RMB 3.3 trillion.
Stablecoins in Practice: Use Cases
Cross-Border Payments:
- Stablecoins enable near-instant settlements, cutting costs and bypassing traditional systems like SWIFT.
- Example: Tianyang Tech is piloting a stablecoin-rechargeable credit card for跨境 e-commerce.
Real-World Asset (RWA) Tokenization:
- Compliant stablecoins could unlock liquidity for real estate, bonds, and other传统资产, per CITIC Securities.
Corporate Adoption:
- Zhongke Jincai (a Beijing Blockchain Association leader) established a Hong Kong subsidiary in March 2025 to explore stablecoin and RWA innovations.
Broker Insights: The Big Picture
👉 How Stablecoins Are Reshaping Global Finance
- Huaxi Securities: Stablecoins may accelerate人民币国际化 (RMB internationalization) via跨境 trade settlements.
- CITIC Construction: Predicts a "trillion-dollar market" as合规 stablecoins bridge传统 finance with blockchain.
FAQ Section
Q1: Are stablecoins legal worldwide?
A: Regulations vary. Hong Kong’s ordinance is a milestone, but the U.S. and U.K. are still finalizing frameworks.
Q2: How do stablecoins differ from Bitcoin?
A: Stablecoins are pegged to stable assets (e.g., USD), minimizing volatility—unlike Bitcoin’s price swings.
Q3: Can stablecoins replace banks?
A: Not entirely. They complement现有 systems by offering faster, cheaper跨境 options.
Q4: What risks do stablecoins pose?
A: Centralization (if issuer-controlled) or reserve mismanagement could undermine stability.
Q5: How can investors participate?
A: Via stocks of licensed firms (e.g., LianLian DigiTech) or blockchain projects with合规 stablecoin offerings.
Conclusion
The stablecoin boom reflects a maturing crypto ecosystem merging with传统 finance. As regulations solidify, expect更多 institutional adoption—and volatility—ahead.