Hong Kong Bets on Stablecoins and AI to Future-Proof Its Financial Edge
By Denise Jia
At the 2025 Caixin Summer Summit Friday, Hong Kong financial regulators and top investors stressed the urgency of leveraging emerging technologies like tokenization and AI to adapt to global supply chain disruptions and maintain Hong Kong’s edge as a financial hub.
The event, themed “Embrace Change, Harness Dynamics, and Attain Mastery,” brought together policymakers, financiers, and tech leaders for a high-level forum on the city’s evolving role in a rapidly shifting economic landscape.
Fang Fenglei, chairman of Hopu Investment Management Co. and a pioneer in China’s private equity scene, hosted a candid discussion with Arthur Yuen, Acting Chief Executive of the Hong Kong Monetary Authority (HKMA). The dialogue centered on two major variables shaping the future: global supply chain restructuring and the rise of digital finance.
“The supply chain of the future is not just about moving goods—it now begins with R&D and ends in digital settlement,” Yuen said, warning that Hong Kong’s financial system is not yet equipped to handle the growing complexity of these global webs.
He called for urgent development of tech infrastructure, especially unified data platforms and scalable financial systems, to ensure banks can continue supporting multinational trade five years from now.
Hong Kong’s trade finance balances currently total HK$380 billion ($48.6 billion), Yuen noted, much of which services global trade with no direct link to Hong Kong—proof, he argued, that the city is already functioning as a de facto supply chain financing hub.
Digitization is the second key shift, Yuen said, highlighting the transformative potential of generative AI and tokenization. He noted that while fintech investments in Hong Kong reach HK$100 billion annually, only about 6% of banks’ pre-tax profits go toward true tech application development.
“To meet the demands of tokenized finance and AI-led services, investment needs to scale up significantly,” he said. “Public-private partnerships must develop shared infrastructure, particularly for emerging fields like stablecoins.”
When pressed by Fang about Hong Kong’s new stablecoin regulations, Yuen revealed that stablecoins are core to Hong Kong’s long-term strategy to build a clearing and settlement platform for tokenized assets. “They’re not investments; they’re the fuel for decentralized, programmable finance,” he said.
The new stablecoin licensing regime will take effect on August 1. “We’re not building for one or two years—we’re building a regulatory environment for the decade ahead,” Yuen added.
Asked if stablecoins might eventually function as investment tools, Yuen dismissed the notion. “Stablecoins must be one-to-one backed, price-stable, and serve primarily as settlement units—not speculative instruments,” he said.
On whether digital assets and cryptocurrencies can be tied to stablecoins, Yuen explained that most global platforms already use stablecoins for clearing and settlement rather than traditional fiat currencies, making them essential to tokenized ecosystems.
“The efficiency of an all-tokenized platform is unmatched,” he added.
Yuen also discussed the broader digital asset strategy, revealing that Hong Kong will soon release its second major policy statement on virtual assets. The framework will go beyond stablecoins to explore tokenization of traditional assets like stocks, aiming to lower entry barriers for retail investors and enhance liquidity.
Fang turned the discussion to public equity investment, noting that Hong Kong lags behind markets like Singapore and the U.S. in equity-to-GDP ratio and innovation-driven capital deployment.
Yuen acknowledged the gap but argued that Hong Kong’s Wealth Management Connect and its link to the Greater Bay Area present strong future potential. “We’ve seen rapid growth in account openings and capital flow in Phase Two,” he said.
Pressed for any upcoming major policies, Yuen hinted at more cross-border financial collaboration with mainland authorities but stopped short of specifics. “You can expect good things,” he said. “That’s my version of expectation management.”
Contact reporter Denise Jia (huijuanjia@caixin.com)
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