The imminent enforcement of Hong Kong's Stablecoin Ordinance on August 1 has ignited a remarkable rally in stablecoin-related stocks across global capital markets. This surge reflects growing investor confidence in the future of regulated digital assets.
For instance, Guotai Junan International (stock code: 01788) witnessed a staggering single-day surge of 198% on June 25. Although some profit-taking followed, the stock still closed the week with an impressive 167% gain. The momentum was not confined to Hong Kong; U.S. markets also experienced significant activity. Robinhood (HOOD) saw its shares climb nearly 7%, while Circle (CRCL) gained over 3% in a single session.
Circle, often hailed as the "first stablecoin stock," made a spectacular debut on June 5. Its share price skyrocketed 106% from its $31 opening to $64, and within the next eight trading days, it soared approximately four times from its initial price, underscoring immense market enthusiasm.
According to a Chainalysis report, the total value of global stablecoins had surpassed $230 billion by early June 2025. The passage of new legislation is now propelling this sector into a new phase of growth and legitimacy.
What Are Stablecoins?
A stablecoin is a type of cryptocurrency designed to maintain a stable value. Its price is typically pegged to a reserve asset, such as a fiat currency (e.g., the U.S. dollar or euro) or a physical commodity like gold. It effectively acts as a bridge between traditional fiat money and the digital currency ecosystem.
The primary purpose of a stablecoin is to minimize the price volatility common in other cryptocurrencies like Bitcoin. By offering a more predictable store of value, stablecoins enable broader applications for blockchain technology in everyday payments, savings, and sophisticated financial instruments.
Some of the most prominent stablecoins in circulation today include:
- USDT (Tether): The largest by market share, it is pegged 1:1 to the U.S. dollar.
- USDC: Issued by Circle, it is also dollar-backed and is recognized for its high degree of transparency and regulatory compliance.
- DAI: A decentralized stablecoin that is backed by other crypto assets (like Ethereum) instead of traditional currency, operating through smart contracts.
Their key characteristic is price stability, making them far more suitable for daily transactions and as a reliable asset within financial systems compared to their more volatile counterparts.
Key Drivers Behind the Stablecoin Rally
While stablecoins themselves are not new, the recent explosive interest is primarily fueled by significant legislative advancements in major economies.
- Hong Kong’s Stablecoin Ordinance: Passed by the Legislative Council on May 21, 2025, this legislation mandates that issuers must obtain a license and properly manage their reserve assets to protect investors. This move positions Hong Kong as a frontrunner in Asia's digital finance landscape.
- The U.S. GENIUS Act: The U.S. Senate is reviewing the "GENIUS Act," expected to pass in early June. This bill focuses on regulating payment stablecoins, encompassing anti-money laundering (AML) measures and bankruptcy protections, which is poised to bolster confidence in the U.S. market.
This regulatory wave is global. Almost simultaneously, the UK released its own proposals for regulating stablecoin issuance, crypto custody, and financial resilience for crypto firms. Other nations, including Singapore, Japan, South Korea, Australia, and India, have also initiated work on their own stablecoin regulatory frameworks.
The Hong Kong Stock Market Phenomenon
The collective rise of stablecoin concept stocks in Hong Kong is driven by several converging factors. The passage of the local Stablecoin Ordinance has served as a major market catalyst. The first batch of licensed issuers is set to include a consortium of JD.com's fintech arm and Standard Chartered Hong Kong.
Furthermore, the global stablecoin market is expanding rapidly, with projected transaction volumes expected to exceed $12 trillion in 2024, a 25% year-on-year increase. Enhanced regulatory clarity and the entry of major traditional financial institutions—such as J.P. Morgan's upgrade of its JPM Coin to a public blockchain, JPMD—have further solidified market confidence.
The strong performance of these stocks reflects a wave of optimism for the virtual asset industry. Guotai Junan International led the gains, rising 18% on the back of its status as the first company to receive a virtual asset trading platform (VATP) license. OSL Group saw its shares increase over 10%, leveraging its mature trading platform and banking partnerships. China Everbright Limited also rose more than 5%, benefiting from rumors of stablecoin investments and its broader fintech strategy.
The Hong Kong Monetary Authority (HKMA) has launched a "sandbox" for stablecoin issuers. The first cohort includes Standard Chartered, JD Coin Chain, and Yuanwei Innovation, which plan to launch Hong Kong dollar-pegged stablecoins like HKDG, JD-HKD, and HKDR, targeting cross-border payments and decentralized finance (DeFi) applications.
Adding to the momentum, tech giants like Ant Group and Alibaba are reportedly preparing to apply for stablecoin issuance licenses in Hong Kong, signaling serious intent from big tech to participate in this emerging market.
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Traditional securities firms are seeking partnerships with trading platforms to capitalize on this trend. Brokers like Futu, which possess a large user base and technological prowess, are applying for their own VATP licenses to expand their market participation.
The expansion also benefits infrastructure providers. Companies like ZA Bank (custody services), BlackRock (fund management), and various tech firms specializing in KYC protocols and blockchain security are poised to gain from the implementation of Hong Kong's stablecoin policy and the overall industry expansion.
Frequently Asked Questions
What is the primary advantage of using a stablecoin?
The main advantage is stability. Unlike volatile cryptocurrencies, a stablecoin's value is anchored to a reliable asset, making it practical for everyday transactions, remittances, and as a safe haven within the crypto ecosystem without the fear of sudden value fluctuations.
How does new legislation protect stablecoin investors?
New regulations, like those in Hong Kong and the proposed U.S. bill, require issuers to be licensed and hold full reserves in high-quality liquid assets. This ensures that every stablecoin in circulation is fully backed, protecting investors from issuer insolvency and promoting greater market transparency.
Can anyone create and issue a stablecoin?
While technically possible, doing so legally now requires compliance with stringent new regulations. In regulated jurisdictions, issuers must obtain official licenses, undergo regular audits, and meet strict capital and reserve requirements to protect users and ensure financial stability.
What is the difference between a centralized and decentralized stablecoin?
Centralized stablecoins (like USDT and USDC) are issued by a single company that holds the reserve assets. Decentralized stablecoins (like DAI) are governed by smart contracts and a community of users, with collateral held in blockchain-based smart contracts, reducing reliance on a central entity.
Will stablecoins replace traditional banking?
It is unlikely they will fully replace traditional banking in the near future. Instead, stablecoins are more likely to complement existing systems by offering faster, cheaper, and more transparent transactions for specific use cases like cross-border payments and DeFi applications.
How can investors participate in the growth of the stablecoin sector?
Investors can gain exposure by investing in publicly-listed companies involved in the ecosystem, such as licensed issuers, trading platforms, technology providers, and traditional financial institutions that are integrating stablecoin services into their offerings.