October 10, 2024

By Joe Pan

Since the Hong Kong Monetary Authority’s (HKMA) launch of the stablecoin issuer sandbox arrangement on March 12, 2024, there is an increasing focus on stablecoin issuance. Against this backdrop, the panel on “Challenges and Possibilities: Stablecoin Issuance and Their Impact on Global Finance” emerged as one of the most Hong Kong-relevant discussions at the Post Quantum Blockchain Day. Experts from various sectors of the stablecoin ecosystem gathered to share their insights on the future of stablecoins, their potential impact on global finance, and the evolving regulatory landscape in Hong Kong and beyond.

The panel featured Danny Lung, Co-Founder & CEO of PQA Labs, Giorgia Pellizzari, Managing Director & Head of Custody at Hex Trust, Patricia Cheung, COO of IDA, Sebastian Ko, General Counsel at DFX Labs, and Devere Bryan, Group General Manager & CBO at First Digital. The discussion was moderated by Raphael Jansa, General Manager of The FinTech Association of Hong Kong.

Experts believe that regulatory clarity is essential for fostering trust and adoption. Giorgia Pellizzari emphasized, “We do believe regulation is very important, is needed. We encourage it, obviously a business-enabling regulation, not something that cripples businesses.”

They reckon stablecoins have diverse use cases beyond crypto trading. Danny Lung noted, “Stable coins are definitely the best tool, it is a killer app on blockchain, no doubt about it.”

They also believe that improved user experience and seamless integration are crucial for mass adoption. Sebastian Ko highlighted, “There are still a lot of kinks that we need to iron out before we can see a massive mainstream adoption of stablecoins.”

The panelists think that potential for non-USD stablecoins presents a significant opportunity. Patricia Cheung suggested, “This developing into non-US dollar currencies is a huge opportunity set.”

They also think that interoperability between blockchain networks and traditional finance is vital for growth. Giorgia Pellizzari emphasized, “From a custody perspective, I think what’s important for adoption of stablecoin is that those who ultimately reach the many, so payments providers, of course the banking system, they need to open up.”

The stablecoin ecosystem may consolidate, with a few key players emerging as winners, they believe. Danny Lung predicted, “It’s going to be a few players, it’s only a few players going to win out.”

The panel discussion shed light on the rapid evolution of stablecoins and their potential to reshape global finance. While regulatory challenges remain, the panelists expressed optimism about the future of stablecoins, particularly in terms of their ability to enable more efficient cross-border transactions and provide alternative financial solutions in emerging markets.

As the industry moves forward, collaboration between stablecoin issuers, custodians, exchanges, and regulators will be essential to create a robust and trustworthy ecosystem. The panelists emphasized the importance of striking a balance between innovation and compliance, ensuring that stablecoins can thrive while safeguarding the interests of users and the broader financial system.

Despite the excitement surrounding stablecoins, the panelists acknowledged that there are still challenges to overcome. As Devere Bryan aptly put it, “We’re at the beginning of this journey.” The road ahead may be long, but with the right regulatory framework, technological advancements, and collaborative efforts, stablecoins have the potential to revolutionize the global financial landscape.