The New Era of Digital Stablecoins: JD Hong Kong’s Exploration and International Comparison

Recently, there have been several landmark events in the field of digital stablecoins: the US GENIUS Act stablecoin bill was passed by the Senate committee, the Hong Kong Legislative Council passed the stablecoin regulatory bill, the former vice governor of the Bank of China called for attention to the development of stablecoins, and Circle’s stock price surged on its first day of listing. These all indicate that stablecoins are entering a new stage of development.

JD’s issuance of stablecoins in Hong Kong is an active exploration by Chinese enterprises in the digital currency field. This article analyzes the background, progress, and technical implementation of JD’s Hong Kong stablecoin project, assesses its impact, and discusses the profit model of stablecoins, the policy environment, and global trends.

1. Current Progress Overview

JD Coin Chain Technology ( Hong Kong ) Limited is advancing the pilot issuance of Hong Kong dollar stablecoin in Hong Kong. In July 2024, JD was selected as one of the first participants in the Hong Kong Monetary Authority’s “Stablecoin Issuer Sandbox”. The project is currently in the late stage of sandbox testing, having completed multiple rounds of testing for retail and institutional users, focusing on scenarios such as cross-border payments, investment transactions, and everyday retail consumption.

JD.com maintains close communication with the Hong Kong Monetary Authority and collaborates with regulatory agencies in other regions to promote the global compliance expansion of stablecoin businesses. The project has received recognition and guidance from Hong Kong regulators, providing a basis for the formulation of formal regulatory systems.

Overall timeline: Hong Kong formulates a regulatory framework for stablecoins by the end of 2023 → JD.com enters the sandbox pilot in July 2024 → In May 2025, the Hong Kong Legislative Council passed the “Stablecoin Ordinance” → In mid-2025, JD.com’s stablecoin will complete multiple rounds of testing, and the issuance will be imminent.

! JD.com Joins the Global Stablecoin Race: From Sandbox Pilot to License Battle

2. Strategic Significance

For JD.com, stablecoins can serve as the payment infrastructure for global operations, addressing the pain points of cross-border payment settlements. The positioning is not limited to serving its own e-commerce ecosystem, but rather provides payment solutions for global enterprises and individuals. By mastering the bridge between fiat currency and cryptocurrency exchange, it is expected to gain an advantage in areas such as cross-border e-commerce and overseas market settlements.

For Hong Kong, JD.com’s choice to issue in Hong Kong highlights the city’s value in the digital currency experiment. With the passage of the Stablecoins Ordinance, Hong Kong is the first jurisdiction in the world to establish a comprehensive regulatory framework for fiat currency stablecoins. This is expected to enhance the innovation vitality of Hong Kong’s financial market, attract well-known enterprises to participate, and have a say in international rule-making.

For Chinese mainland, Hong Kong’s stablecoin experiment is instructive. On the one hand, verify the actual benefits of digital currency in trade settlement and consumer payment; On the other hand, it forces the mainland to think about how to absorb the advantages of stablecoins and integrate them into the future digital financial system under the premise of safety and control. Hong Kong’s pilot experience will influence the direction of digital financial regulation and innovation in the mainland.

3. Technical Implementation

3.1 Technical Architecture and Underlying Chain Selection

JD’s stablecoin adopts a blockchain technology architecture, issued based on a public chain, and is pegged to the Hong Kong dollar at a 1:1 ratio to maintain value stability. The choice of a public chain is to leverage the characteristics of blockchain to achieve transparent value circulation and fast settlement, improving compatibility. The specific underlying chain has not been disclosed, and it may be based on mature chains like Ethereum or upgraded from JD’s self-developed regulatory alliance chain.

3.2 Anchoring Mechanism and Reserve Trusteeship

Adopt a 100% full reserve anchoring mechanism, with reserve assets composed of highly liquid assets, stored in independent accounts at licensed financial institutions. A well-designed redemption mechanism allows users to submit redemption requests, and the issuer promises to pay out the equivalent in fiat currency within a reasonable time frame. The system records the issuance and redemption processes through smart contracts or backend, ensuring that the on-chain token quantity corresponds in real-time with the reserve assets.

3.3 Cross-border Payment and Smart Contract Mechanism

With the help of blockchain peer-to-peer transmission, cross-border fund clearing can bypass multiple intermediaries, achieving near real-time arrival. Test scenarios include cross-border trade payments and retail payments, which are expected to solve pain points such as slow settlement and high fees.

In terms of smart contracts, the programmable features allow enterprises to integrate stablecoins into contracts for automated payments. For example, in supply chain finance, contracts can be written to automatically release payments once logistics confirm receipt of goods. It also supports basic compliance functions, such as blacklist and freezing functions, to meet anti-money laundering requirements.

4. Profit Model of Digital Stablecoins

4.1 Seigniorage and Spread Income

The primary source of profit for issuing stablecoins is seigniorage or interest rate spread income. Users exchanging fiat currency for stablecoins effectively provide the issuer with interest-free capital. The issuer can invest the reserves in low-risk interest-bearing assets to earn interest spreads.

From a global perspective, recent interest rate increases have significantly boosted the profits of stablecoin issuers. Circle disclosed that the interest income from USDC is expected to reach $2.1 billion in 2023, while Tether’s net profit for the first half of 2023 is approximately $2.2 billion. For JD.com, if the issuance scale reaches billions, an annualized return of 2-5% could also bring in tens of millions to over a hundred million HKD in interest income.

4.2 Value-added Services and Ecological Effects

In addition to interest income, stablecoins can bring a variety of active profit models and strategic benefits:

1. Transaction and exchange fees: A small fee is charged for the issuance, redemption, or large transfers of stablecoins.

2. Cross-border settlement and payment service derived income: providing exchange services, wallet custody, payment gateway and other value-added services.

3. Supply chain finance: provide financing, factoring and other services for upstream and downstream suppliers.

4. Ecological effect: improve user stickiness and retention rate, promote data precipitation, and indirectly create value.

Overall, the profit model of stablecoins is diverse - in the short term, there are direct benefits such as minting interest spreads, and in the long term, the more important aspect is the strategic significance for the payment landscape and financial ecosystem. Once widely adopted, it will further consolidate JD’s infrastructure position in the fields of cross-border e-commerce and digital finance.

5. Hong Kong’s policy environment

5.1 Stablecoin Regulations and Licensing Regime

Hong Kong passed the “Stablecoin Ordinance” in May 2025, establishing a licensing system for stablecoin issuers. The main provisions include:

• Reserve Asset Management: It is necessary to hold sufficient and highly liquid reserve assets, kept separate from customer funds.
• Redemption obligation: It must be clear that the holder has the right to redeem at par value and that redemption requests are handled within a reasonable time.
• Risk and Compliance: Meet AML/CFT requirements, establish risk management systems, and regularly disclose reserve status, etc.

After the implementation of the regulations, only designated licensed institutions are allowed to sell fiat stablecoins in Hong Kong, and only licensed issued stablecoins can be offered to retail investors.

5.2 Sandbox Policy and Latest Developments

The Hong Kong Monetary Authority (HKMA) launched the “Stablecoin Issuer Sandbox” in March 2024, with the first batch of three entities including JD.com. Through the sandbox, the regulator can identify and resolve potential problems in a timely manner, providing a basis for the formulation of rules and regulations.

After the regulations come into effect, the Monetary Authority will further issue a consultation document to formulate detailed regulatory guidelines. It is expected that the first batch of stablecoin issuance licenses will be granted within the year, and licensed institutions must operate strictly according to the guidelines.

Overall, Hong Kong adopts a cautiously open attitude: on one hand, it actively introduces market participants to test the waters; on the other hand, it quickly establishes a legal framework. This model of piloting first and legislating later is seen as a way to strike a balance between encouraging financial innovation and maintaining financial stability.

5.3 Details on Regulatory Coordination and Licensing System

The regulation of stablecoins is mainly led by the HKMA, which coordinates with the SFC. Under the new Ordinance, only licensed banks, licensed value storage payment instruments or specially approved companies are allowed to provide stablecoin services. The license application needs to meet the minimum capital, business plan review, risk assessment and other conditions.

Recently, Hong Kong has been participating in discussions on cross-border stablecoin cooperation, such as exploring the use of stablecoins in the Guangdong-Hong Kong-Macao Greater Bay Area to enhance the efficiency of cross-border payments, as well as the integration of Hong Kong stablecoins with the pilot program of the digital renminbi in mainland China. This indicates that Hong Kong is incorporating stablecoins into its financial innovation strategy.

6. International Comparative Analysis

6.1 Global Regulatory Race and Trends

The world’s major economies are stepping up to build a regulatory framework for stablecoins, showing a synchronous race situation. More than a dozen countries and regions have launched formal regulations or drafts, marking the transition of stablecoin legislation from a regional experiment to a global unified framework.

A consensus among regulators in various countries is gradually forming: viewing stablecoins as payment tools rather than purely speculative assets, and developing regulatory logic with a financial infrastructure mindset. Hong Kong, the United States, the European Union, Singapore, and others have relevant legislation or clear guidelines.

6.2 United States: Regulatory Exploration and Market Practice Progressing Together

The U.S. Senate passed the GENIUS Act, establishing the first nationwide unified regulatory framework for stablecoins. The Act requires issuers to obtain federal licenses and meet conditions such as reserve audits, timely redemptions, and risk monitoring.

In terms of the market, the United States has the world’s largest stablecoins, USDT and USDC, with a combined market capitalization of about $214 billion. Payment giant PayPal issued PYUSD, becoming the first dollar stablecoin launched by a regulated financial institution.

Overall, the United States is moving from a market-driven approach to a regulatory framework implementation stage. Once federal laws are enforced, they will provide compliant issuers with a clearer legal status while deterring violators. The experience of the United States also influences the formulation of international standards, making it possible for stablecoins to be integrated into the mainstream financial system.

6.3 Europe: MiCA Regulations Lead Comprehensive Regulation

The EU “Regulation on Markets in Crypto-Assets” ( MiCA ) will come into effect in phases from 2024 to 2025, setting detailed and stringent requirements for stablecoins, including:

• Issuance License: Issuers of stablecoins offered to users in the EU must obtain an authorized license.
• Reserve requirement: Hold safe and low-risk assets as reserves, the value of which is at least equal to that of circulating stablecoins.
• Redemption and Rights: Holders have the right to redeem at any time on a 1:1 basis, and the provision of interest or returns is prohibited.
• Operational Restrictions: Meet strict governance requirements, avoid conflicts of interest, and be restricted by marketing promotions.

MiCA also sets special rules for significant stablecoins, such as higher capital requirements and stricter scrutiny when their scale exceeds thresholds.

Overall, MiCA provides the most comprehensive and detailed stablecoin regulatory scheme available, which is described by the industry as “setting a global regulatory benchmark”. Compared with the Hong Kong Ordinance, which focuses on Hong Kong dollar stablecoins, MiCA covers all fiat currency stablecoins, reflecting the breadth and uniformity of regulation.

6.4 Singapore: Clarification of Single Currency Stablecoin Standards

The Monetary Authority of Singapore ( MAS ) has released a new regulatory framework for stablecoins, applicable to single-currency stablecoins pegged to the Singapore dollar or G10 currencies. The main requirements include:

• Value Stability: 100% high-quality asset reserves.
• Capital requirement: not less than 1 million SGD or 50% of annual operating expenses.
• Redemption timeframe: no more than 5 working days.
• Asset custody and independent audit: Reserve assets are held in custody with an authorized institution and verified on a monthly basis.

The MAS stipulates that stablecoin issuers may apply for a license to operate under the existing Payment Services Act. Local stablecoin projects such as XSGD have emerged in Singapore.

Singapore and Hong Kong have commonalities in regulation, such as 100% reserves and ensuring redemption guarantees. The difference lies in Singapore’s focus on a single currency stablecoin for the local currency and major foreign currencies; whereas Hong Kong explicitly states that only stablecoins pegged to the Hong Kong dollar can be issued, and any stablecoin pegged to the Hong Kong dollar must be regulated by Hong Kong.

7. Industry giants

PayPal launch of PYUSD

In August 2023, PayPal released the US dollar stablecoin PYUSD, which was issued by Paxos and pegged 1:1 to the US dollar. PYUSD is integrated into the PayPal wallet app, allowing users to buy, sell, hold, and transfer. The strategic purpose is to integrate blockchain technology into mainstream payment networks to enable low-cost, near-real-time cross-border transfers and payments.

In 2024, PayPal announced an annualized 3.7% yield reward for US users who hold PYUSD to attract users to retain funds. The long-term plan is to make money through transaction fees, etc.

The addition of PayPal is seen as a landmark event for stablecoins to “go out of the circle” and is expected to drive more traditional payment companies to evaluate similar initiatives.

Stripe integration stablecoin payment

Stripe launches new features such as stablecoin payment accounts in more than 100 countries around the world. Merchants can open USDC accounts.