The true goal of this "covert strategy" in Hong Kong has never been stablecoins.

Author: Will Ah Wang | Web3 Little Lawyer

Original link:

Disclaimer: This article is a reprint. Readers can access more information through the original link. If the author has any objections to the reprint, please contact us, and we will modify it according to the author’s requirements. Reprints are for information sharing only, do not constitute any investment advice, and do not represent Wu Shuo’s views and stance.

After the Hong Kong Monetary Authority defaulted last month, today it finally issued the first batch of stablecoin licenses—HSBC and Standard Chartered, consistent with our previous article “Hong Kong Dollar Stablecoin, No Need to Become USDC.”

Although the outcome itself was not surprising, it was disappointing.

Coincidentally, I have been recently studying Professor Jiang Xueqin’s geopolitical game theory, and Rain also wrote an article titled “Hong Kong Stablecoin, a Carefully Designed ‘Sun Tzu Strategy’.” With these two things overlapping, I want to try to view this licensing from a game theory perspective—wildly, for a laugh.

Jiang Xueqin’s analysis of Trump’s Iran war logic is as follows: On the surface, this war is a foolish blunder. But if we change the hypothesis with game theory—that Trump wants this “failure”—then he might be a genius.

This article applies the same framework to Hong Kong stablecoins, hypothesizing a top-level “Sun Tzu strategy.”

1. A list that disappoints everyone

The first batch of stablecoin licenses issued by the Hong Kong Monetary Authority yesterday is the version the market least wanted to see:

Standard Chartered, HSBC; Bank of China Hong Kong absent.

This result is disappointing. Foreign banks have no inherent interest in creating Hong Kong dollar stablecoins; entities like Bank of China Hong Kong with strategic intent are instead sidelined, and key scene players—brokerages, exchanges, internet companies—have been systematically excluded from the legislative consultation stage.

Once the first batch of licenses was issued, the narrative around Hong Kong stablecoins was effectively “suspended.”

But if you are HKMA, would you choose such a list?

You have the complete experience from the 2024 Project Ensemble sandbox, you’ve studied all cases from the initial project to promotion of digital RMB, and you hold the natural advantage of the dual-track system of SFC + HKMA—then why pick a list that can’t even run the most basic commercial closed loop?

Unless, this disappointing list was never meant to satisfy the market in the first place.

2. A reverse reasoning: what if the initial assumption was wrong?

Understanding this list requires a different framework.

Recently, I’ve been following Jiang Xueqin’s game theory series. On April 2, he discussed Trump’s Iran war, and there’s a phrase I remember vividly:

“I understand Donald Trump’s an idiot. I understand that he’s going to lose his war in the Middle East. But let’s put our thinking caps on. Let’s use game theory and say—what if, for some strange reason, Donald Trump wants to lose his war in Iran? Then he’d be a genius.”

— Professor Jiang, Game Theory #18, April 2, 2026

Jiang’s reasoning is simple: if you assume Trump wants to “win,” then every step he takes is inexplicably foolish. But if you flip the assumption—that he actually wants to “lose this war”—then using a controlled Middle East collapse to shift global energy dependence to North America becomes a coherent strategic plan.

This is called Managed Collapse. It’s not about avoiding failure, but about creating a failure that benefits oneself.

Back to the Hong Kong stablecoin licensing: if you assume the goal is to “expand the Hong Kong dollar stablecoin industry,” then every detail might not make sense—giving licenses to the least motivated institutions, setting barriers so high that it’s commercially unfeasible, repeatedly challenging applicants’ business logic, excluding the most strategic entities.

But if you change the hypothesis—that this licensing was never meant to develop the “commercial stablecoin industry” itself—

then everything becomes coherent.

Following this hypothesis, the scene, institutions, and infrastructure all align.

3. Scene level: three false propositions

Each applicant will tell three stories: cross-border payments, RWA, and C-end consumption.

But all three are untenable.

A. Cross-border payments are a false proposition

Typical flow: a company in Country A mints stablecoins A in fiat, exchanges them on the secondary market for stablecoins B, pays a company in Country B, which then redeems fiat B. Essentially, it’s about reducing costs of foreign exchange business monopolized by banks through Web3 exchanges—logical for financial inclusion of SMEs.

But in this chain, the stablecoin’s lifecycle only exists at the moment of transfer.

When the B-country company receives stablecoins, unless they immediately do the next trade, they still need to redeem for fiat. What you need isn’t a one-time transfer, but a closed loop with a “next taker” always waiting.

Rain pointed out an important and more fatal point—the Fisher Equation. MV = PT, where money supply times velocity equals price times output. On-chain stablecoins circulate at a much higher velocity than traditional bank clearing.

This means: the amount of stablecoins needed to support the same trade volume is actually less. The more successful cross-border payments are, the lower the demand for stablecoin deposits.

This isn’t a closed loop; it’s an anti-closed loop.

B. RWA is a false proposition

RWA essentially boils down to tokenization of asset shares.

Fundraising involves stablecoins, but after the asset manager receives stablecoins, they need to buy underlying assets, which sellers almost never accept stablecoins for—asset securitization is about exit or cash flow optimization, nobody wants stablecoins.

The result: the lifecycle of stablecoins in RWA scenarios only exists during fundraising.

C. C-end consumption

One sentence: Hong Kong’s retail market is too small, not worth mentioning.

All three stories are false propositions. And HKMA, as the regulator overseeing the entire process, is clearer than any applicant.

Then why does it still issue licenses?

4. Institutional level: a “voluntary” list

HSBC and Standard Chartered probably didn’t come with strategic intent.

HSBC’s participation might be passive—this makes sense. HSBC’s strategic focus has long shifted away from stablecoins; what they’re really pushing is tokenized deposits. For HSBC, applying for a Hong Kong dollar stablecoin is more of a defensive move than an active strategy.

Standard Chartered has some initiative, but Hong Kong is just a node in its global footprint. HKD stablecoins can connect to its Libra platform, but Hong Kong has never been its main battlefield.

The entity with real intent and local scene presence—Bank of China Hong Kong—is absent.

Strange? Not at all. As long as you understand that the Hong Kong government is designing a mechanism to make “voluntary” the optimal choice:

First rule: Licenses only issued to note-issuing banks

This immediately creates an exclusive club. If HSBC doesn’t apply, it means only Standard Chartered will be on the Hong Kong dollar digital track in the future. For an institution that has built its brand on “note-issuing bank” for 160 years, this is an unbearable symbolic loss. So HSBC must participate.

Second rule: Extremely high technical and compliance thresholds

Building a multi-million dollar HSM room, anti-money laundering architecture, on-chain monitoring, reserve pools—this turns issuing stablecoins into a pure cost, not a business. Normal commercial entities would calculate ROI and exit. But HSBC and Standard Chartered can’t exit—the first rule has already locked them in.

They’re not here to make money; they’re here to avoid losing their seat.

Third rule: Repeatedly challenge business logic

This is the most ingenious part. During interviews, the government repeatedly asked applicants: Why do you want to issue your own, instead of using others’?

This explicitly tells applicants—“I don’t care if you can make money.” Only those who can demonstrate they can help Hong Kong build this infrastructure will stay.

Stacked together, these rules mean the Hong Kong government isn’t forcing anything.

HSBC and Standard Chartered are “voluntarily” applying, “voluntarily” investing millions of dollars, “voluntarily” bearing user education and scene development costs. But each “voluntary” choice is the best under the rules pre-set by the government.

This isn’t command; it’s design.

And the absence of Bank of China Hong Kong is no surprise—those with the strongest strategic intent are not suitable infrastructure contractors. Entities with strong strategic intent will turn stablecoins into their own products, with their own pace and demands. The government’s goal isn’t a commercial product, but infrastructure.

Moreover, Bank of China Hong Kong is already on another track.

5. Infrastructure level: leveraging the push of something initially hard to move

HKMA’s real goal is e-HKD.

e-HKD is the government’s digital currency—Hong Kong’s version of digital RMB. The goal is clear: gradually migrate interbank clearing and retail payments onto a blockchain issued by the central bank. This has been the government’s ongoing push for the next-generation financial infrastructure, and it’s the endgame of the entire strategy.

The 2024 Project Ensemble sandbox is the first attempt on the e-HKD path: banks and the government jointly maintain a consortium chain, tokenized deposits, reconstructing interbank clearing. The technology is working, but progress stalls—only HSBC and Standard Chartered are willing to join; small and medium banks lack motivation.

The reason it can’t move forward isn’t technical—it’s demand-side inertia. User education costs, scene development costs, technical trial-and-error costs—no one is willing to pay for these.

Recently, Hong Kong itself has been the focus. In May 2024, digital RMB officially integrated into Hong Kong’s Faster Payment System (FPS), becoming the world’s first “central bank digital currency + fast payment system” bilateral interconnection. Over two years, by March 2026, Hong Kong’s digital RMB wallets reached about 80k, with 5,200 merchant connections and 18 local banks participating in top-ups—far from “mainstreaming” in a market of 7.5 million.

What residents actually use daily are still Alipay HK, WeChat Pay HK, and FPS.

Returning to the question in section four: why is Bank of China Hong Kong absent from the stablecoin list? Because the main institution deploying digital RMB in Hong Kong is Bank of China Hong Kong. In October 2025, it partnered with Circle K and FreshUp, supporting digital RMB payments at over 380 convenience stores and 1,200 vending machines across the city.

In other words, Bank of China Hong Kong’s strategic focus has always been on digital RMB. Its absence from the stablecoin list isn’t exclusion—it’s because it’s already doing something more direct.

The Hong Kong government is very clear: relying solely on itself, e-HKD will never be launched. So, the hot topic of stablecoins emerged.

Stablecoins provide the government with something it can never produce on its own: free demand-side momentum. The hype, media, KOLs, VCs, global narratives—all free. The rest follows naturally.

First phase: Let licensed banks use the “commercial stablecoin” narrative to attract users, scenes, and technology. HSBC and Standard Chartered build HSM rooms, implement KYC/AML, educate the public on on-chain HKD, persuade merchants to connect, and run cross-border B2B scenarios—these are all things e-HKD originally wanted to do but couldn’t.

Second phase: Once user habits, clearing habits, and tech stacks are established, the government introduces its own clearing layer as the necessary path for interbank settlement; licensed stablecoins are integrated into this route; later, e-HKD as a native asset goes live, and licensed stablecoins gradually become “upper-layer wrappers” of e-HKD.

The brand, wallet, and interface users see remain unchanged, but the underlying clearing has shifted from commercial banks to the central bank.

This path almost exactly mirrors China’s dual-layer operation architecture for digital RMB: direct participants at the front, central bank in the back.

Same architecture, two paths. The difference is—China pushes from the top down, Hong Kong leverages from the bottom up.

The Hong Kong government aims to promote e-HKD through stablecoin regulations, not by pushing e-HKD itself.

6. From a global financial hub to Hong Kong dollar clearing sovereignty

Hong Kong’s core assets are depreciating.

Its decades-long status as an international financial center was fundamentally built on access to the US dollar clearing system—stock financing, interbank lending, trade settlement, private banking—all based on this.

But today, this asset is simultaneously weakening on three fronts—US dollar system politicization making access uncertain, the sluggish return of Chinese concept stocks, and geopolitical conflicts increasing the costs of traditional agent bank channels.

The next-generation international financial center’s competition is no longer about the size of stock markets or private banking funds, but about who controls the next-generation financial infrastructure and clearing sovereignty.

The US is integrating stablecoins into the dollar clearing system via the GENIUS Act, making USDC a digital extension of the dollar. Europe is turning EMT into a euro-denominated digital clearing via MiCA. China is reconstructing cross-border RMB clearing with digital RMB.

All three major currency zones are doing the same: removing their currency’s clearing sovereignty from the SWIFT-era agent bank architecture and embedding it into their CBDC or stablecoin infrastructure.

Hong Kong lacks monetary sovereignty—under the linked exchange rate system, the issuance of HKD is inherently tied to the US dollar. But what Hong Kong can contest is clearing sovereignty: making HKD’s clearing no longer entirely dependent on SWIFT and agent banks, but built on a next-generation infrastructure controlled by HKMA.

From this perspective, understanding this licensing makes everything clear:

· The narrative of “commercial stablecoins” is never the goal, only a tool;

· HSBC and Standard Chartered’s purpose is to help the government complete user education and scene deployment;

· Bank of China Hong Kong’s absence isn’t an omission but a strategic choice to keep low profile;

· VAOTC may never truly materialize, as the mission of crypto speculation has already been fulfilled.

· It’s a controlled narrative downgrade—dispersing the surface Web3 hype while building the underlying clearing sovereignty.

As Jiang Xueqin said, failure is the point.

The key is who is designing this “failure,” and who truly benefits from it.

7. Final thoughts

Does Hong Kong have Web3? Think about the years of noise and debate—perhaps it does. But from a historical perspective, maybe it never did.

What we need to consider is: after Web3 is distilled, what remains?

Actually, Hong Kong never needed Web3—what it needs is the ticket to the next-generation financial center.

And this ticket is being paid for by the first batch of licensed stablecoin institutions.