Reimagining the Role of HK$-Pegged Stablecoin: Unlocking New Value in Hong Kong’s Stock Market

Hong Kong is renowned as one of the world’s largest and most dynamic stock exchanges, leveraging deep liquidity, high trading volumes, and a truly international investor base. With the Hong Kong Monetary Authority (HKMA) unveiling its new stablecoin issuer licensing regime, it’s time to explore how a HK$-pegged Stablecoin could become far more than just a tool for import/export trade or mainstream payments.

Moving Beyond Conventional Stablecoin Use

Traditionally, stablecoins are viewed primarily as instruments for facilitating cross-border payments and reducing friction in import/export trades. But for Hong Kong—a city with robust financial infrastructure and advanced digital adoption—the real opportunity lies in redefining how stablecoins interact with capital markets.

Tokenization: The Next Frontier

Global platforms like Robinhood, Coinbase, and Kraken are launching tokenized versions of major stocks and ETFs, often backed by USD-pegged Stablecoins. By leveraging blockchain, they offer fractional ownership, 24/5 trading, instant settlement, and new ways for investors to engage with traditional equities. These models have begun shifting how financial assets are accessed and traded by retail and institutional investors alike.

How HK$ Stablecoin Can Transform the HK Stock Exchange

• Fractional Ownership & Accessible Investing: Allowing HK-listed stocks to be tokenized (with price and dividends directly linked to HK$ stablecoins) could enable everyday and global investors to buy fractional shares, unlocking new participation and liquidity.

• 24/5 Trading Beyond Market Hours: Blockchain-enabled stock tokens, settled using HK$ stablecoins, could extend trading beyond traditional hours, allowing investors to respond instantly to overseas news or events.

• Streamlined Settlement & Lower Transaction Costs: Blockchain and stablecoin-backed transactions could dramatically reduce settlement times and lower costs for brokers, custodians, and retail investors.

• International Inclusion: By offering HK$ stablecoin-backed tokens, Hong Kong can attract global capital flows, serving investors who want exposure to Asia’s top companies but face currency or market-hour restrictions.

Addressing the Lot Size Barrier with Fractional Ownership

Unlike the US stock market, where investors can buy as little as one share (1 share), the Hong Kong Stock Exchange mandates trading in minimum board lots. These lots can range from as low as 10 shares to hundreds or even thousands of shares, meaning investors must purchase a fixed number of shares per transaction. This can set a high entry barrier, especially for retail investors wanting modest exposure to certain stocks.

There was discussion within Hong Kong’s financial regulators, including the HKMA and HKEX, about adopting a US-like system allowing trading of single shares rather than lots. However, this proposal faded as fast as it first appeared.

This lot size requirement underscores the promise of tokenized fractional ownership: investors could buy true fractional shares that do not conform to lot restrictions. Combined with HK$-pegged stablecoin settlements, this could revolutionize how retail and global investors participate in Hong Kong stocks — lowering barriers, increasing liquidity, and modernizing market accessibility.

A Call to Action for Policymakers and Innovators

HKMA’s recent move to license stablecoin issuers presents a timely opening for homegrown financial innovation. Unlike global giants such as Circle (USDC), which—as of September 2025—hold upwards of US$75 billion in reserves, the HKMA adopts a more flexible approach. Issuers of HK$-pegged stablecoins are only required to maintain reserves equivalent to the stablecoins they issue. This practical framework acknowledges that most local companies—even major players like Tencent, Alibaba, and the largest Hong Kong banks—may hesitate or find it challenging to commit capital at levels comparable to those maintained by global leaders.

Rather than competing solely in payment and trade use cases—where global players may have an insurmountable scale advantage—Hong Kong can leverage its regulatory environment and market leadership to pioneer applications of HK$-pegged Stablecoins that global giants might find difficult to pursue. Crucially, the HKMA and HKEX can craft specific rules that enable stablecoins to be used in trading HK stocks, no matter the size or scale of the issuing entity. This flexibility allows Hong Kong to explore innovative business models and market reforms that are tailored to its unique ecosystem, rather than simply mimicking international standards.

Payment and trade use cases may serve as initial talking points for stablecoin startup issuers, but the true key growth area lies in next-generation investment vehicles and capital market applications uniquely suited to Hong Kong’s strategic position in global finance.

Are we ready to unlock the next chapter of Hong Kong’s stock market evolution with stablecoin innovation?

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