Amid dwindling economic fortunes, the Hong Kong General Chamber of Commerce (HKGCC) is pushing to issue stablecoin linked to China’s yuan as an economic recovery solution.
In a statement, the HKGCC indicated support for yuan stablecoins in an attempt to ride the wave of China’s recent economic upswing, given the proximity and interdependency of both jurisdictions. The HKGCC made the suggestions in a Budget Submission to the Office of the Financial Secretary, calling for the rollout of stablecoins backed by the U.S. dollar and other leading global currencies.
Apart from the planned rollout of stablecoins, the HKGCC called on the prospects of a Virtual Asset Connect Scheme, which it says will be key in the region’s planned economic turnaround. However, the exact working of the plans is unclear, but sources indicate a daily limit of HK$20 billion ($2.5 billion).
There are plans to introduce a 5% digital services tax on service providers domiciled outside Hong Kong designed to prop up the operations of local players. The measures are intended to attract global talent and service providers to Hong Kong while improving its appeal as “Asia’s premier business and financial hub.”
Outside of Web3, the HKGCC has advanced a series of short-term reliefs to trigger economic growth. For starters, the body is calling for a one-off rebate on salary taxes and removing fees for special and double stamp duties.
Firms that move their regional headquarters to Hong Kong will enjoy a three-year tax holiday and a reduction of corporate taxes.
The most significant impact of the HKGCC’s blueprint lies in the financial markets, with the office exploring the issuance of green bonds to trigger economic activity. The internationalization of the RMB is indicated as a key strategy for Hong Kong’s long-term objectives via improving the existing Connect Scheme and allowing the trading of yuan-denominated stocks.
Other strategies for economic recovery mooted by the HKGCC include tighter retirement protections, the development of an intellectual property trading center, and a range of government support schemes.
Hong Kong’s Web3 push
Hong Kong officials have been making significant inroads in Web3, luring global service providers to set up shop in the region. Employing a slew of strategies, including the offer of financial services, tax rebates, and government incentives, several firms are reportedly
splurging millions of dollars to snag operating licenses.
With a robust stablecoin regulation in the works, Hong Kong’s Securities and Futures Commission (SFC) is pushing for new rules for asset tokenization and spot ETFs linked to digital assets.
“The SFC sees the potential benefits of tokenisation to the financial markets, particularly in increasing efficiency, enhancing transparency, reducing settlement time and lowering costs for traditional finance, but it is also aware of the new risks arising from the use of this technology,” read an SFC circular in November.
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