Hong Kong lawmaker wants to turn CBDC into stablecoin featuring DeFi

Published at: Jan. 5, 2023

Hong Kong authorities are looking for new designs for a central bank digital currency (CBDC), now proposing to issue a CBDC in the form of a stablecoin backed by the government.

Wu Jiezhuang, a member of the Legislative Council of the Hong Kong Special Administrative Region, believes that turning the Hong Kong digital dollar (e-HKD) into a stablecoin would provide benefits for the adoption of new technologies like Web3.

The option of developing e-HKD into a stablecoin has the potential to address the risks associated with virtual assets in Web3 effectively, Wu Jiezhuang said in an interview with China Blockchain News on Jan. 5. According to the lawmaker, such a design of the Hong Kong digital dollar would help authorities gain investors' trust in the Web3 industry and better protect users from issues like hacks.

“The stablecoins that are currently available in the market are all issued by some private companies and are not subject to government supervision,” Wu Jiezhuang said, referring to failures of several stablecoin projects in 2022, which caused a domino effect on the crypto market.

The lawmaker also pointed out that the stablecoin could be connected to decentralized finance (DeFi) for better access in Web3 ecosystems, stating:

“The Hong Kong government can consider whether the issuance of digital Hong Kong dollars can be connected with decentralized finance and become an important infrastructure component of the virtual asset trading platform.”

“The Hong Kong government can consider whether the issuance of digital Hong Kong dollars can be connected with decentralized finance and become an important infrastructure component of the virtual asset trading platform.”

Apart from his role as a Hong Kong Legislative Council member, Wu Jiezhuang is also a founding member of G-Rocket, a startup accelerator that aims to attract 1,000 Web3 businesses to set up shop in the city-state over the next three years. He co-founded G-Rocket with Hong Kong legislative council member Jonny Ng Kit-Chong in 2016.

Related: How crypto could be good for CBDC and vice versa: Industry exec explains

Wu Jiezhuang is the latest government official to highlight the potential benefits of the combination of CBDC and DeFi. Thomas Moser, a governing board member at the Swiss National Bank, said in September 2022 that a CBDC could provide more stability to DeFi and reduce the risks of its development.

Previously, Mikkel Morch, executive director at the digital asset hedge fund ARK36, suggested that a CBDC doesn’t have to be a competitor to a private or decentralized cryptocurrency. At the same time, a CBDC could potentially diminish the role of private stablecoins, he noted.

Tags
Regulation
Hong Kong
Defi
Stablecoin
Web3
Cbdc
Related Posts
Decentralization vs. centralization: Where does the future lie? Experts answer
The dichotomy between centralization and decentralization in human history seems to be opposing forces gradually overcoming or being overcome by each other. And while one replaces the other, people are justifying both, finding philosophical or theoretical reasons for the existence of both of them. Centralization In the middle of the 17th century, British philosopher Thomas Hobbes published a book titled Leviathan (or, The Matter, Forme and Power of a Commonwealth Ecclesiasticall and Civil), where he formulates social contract theory. According to Hobbes, roughly simplified for this article, humans started from a summum malum — greatest evil — or a constant …
Decentralization / May 23, 2021
CBDCs and COVID-19 Top Agenda in First Two Days of Unitize Conference
The first two days of Unitize, the virtual conference organized by BlockShow and San Francisco Blockchain Week, have come and gone with speakers from various sectors of the emerging crypto and blockchain space. Developments around central bank digital currencies, as well as the impact of COVID-19 on the industry, have taken center stage during the first two days of the event. Crypto and blockchain adoption amid the pandemic The COVID-19 outbreak continues to dominate discourse across the social, political, economic and several other facets of human life. Thus, it was unsurprising to see the novel coronavirus featured in multiple panels …
Technology / July 8, 2020
Consensus 2022: Web3, unpacking regulations, and optimism for crypto’s future
“Everything is bigger in Texas” proved to be true during Consensus 2022. The crypto conference took place June 9–12 in Austin, Texas, this year, attracting over 20,000 people from across the globe, despite the 100-degree plus weather. According to the event sponsors, Consensus 2018, which was held at the Hilton Hotel in New York, had previously drawn in almost 9,000 attendees. Caitlin Long, CEO of Custodia — the Wyoming-based digital asset bank — told Cointelegraph that the event this year speaks volumes. “New York has sent a lot of this industry fleeing to places like Austin, Wyoming and Miami. It …
Adoption / June 14, 2022
After Terra’s fall to Earth, get ready for the stablecoin era
Stablecoins were supposed to be the boring uncle of the crypto world — safe, sensible and dull. They’re probably not what Satoshi Nakamoto had in mind, but they’re supposed to be a reassuring haven of calm and utility away from the turbulence of pure-play cryptocurrencies. With values pegged to fiat currencies, stablecoins were intended to be useful rather than to offer get-rich-quick schemes. They play an important role in the cryptocurrency ecosystem by providing a safer place to store capital without having to cash out entirely, and allowing assets to be denominated in fiat currencies rather than volatile tokens. However, …
Adoption / July 10, 2022
Chasing the hottest trends in crypto, the EU works to rein in stablecoins and DeFi
In cryptoland, the fall tends to be regulators’ open season. As unprecedented as it’s been, 2020 is no exception to this trend. Tensions are high on both sides of the Atlantic: As markets were still processing the news of the United States Commodity Futures Trading Commission cracking down on derivatives exchange platform BitMEX, the Financial Conduct Authority, the British financial watchdog, moved to ban retail investors from using cryptocurrency derivatives altogether. The densely packed news cycle has somewhat muffled the impact of another regulatory bomb that dropped a week earlier and is bound to have major lasting effects on the …
Regulation / Oct. 18, 2020