Stablecoin Surge: Why Market Sentiment Is Heating Up

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In recent months, stablecoins have emerged as a transformative force in global finance, capturing the attention of investors, regulators, and financial institutions alike. The passage of Hong Kong’s Stablecoin Bill in May 2025 has acted as a catalyst, igniting a rally in related stocks and signaling a pivotal shift toward regulated digital asset ecosystems. This article explores the driving forces behind stablecoin momentum, their real-world applications, and the broader implications for financial markets and monetary policy.

Hong Kong’s Regulatory Milestone Sparks Market Reaction

On May 21, 2025, the Legislative Council of the Hong Kong Special Administrative Region passed the Stablecoin Ordinance Bill in its third reading—a landmark move that establishes a formal licensing regime for stablecoin issuers. The bill, comprising 11 parts and 176 clauses, strengthens Hong Kong’s regulatory framework for virtual assets and positions the city as a leader in digital finance innovation.

👉 Discover how regulatory clarity is reshaping digital finance—explore the latest developments here.

The market responded swiftly. ZhongAn Online P&C Insurance (06060.HK), which holds a 43.43% stake in ZhongAn Bank (ZA Bank), saw its stock surge nearly 60% from May through early July, peaking at HK$22.75 on June 19. Similarly, Guotai Junan International (01788.HK) experienced a staggering 198% single-day spike on June 25 after upgrading its SFC license to include virtual asset trading and advisory services.

While these firms operate in different financial niches, their shared trajectory underscores a common theme: the growing synergy between traditional finance and regulated digital assets.

How Financial Institutions Are Capitalizing on Stablecoin Growth

ZhongAn Bank has been at the forefront of Web3 banking innovation. In April 2023, it launched its “Banking for Web3” vision and became the first digital bank in Hong Kong to offer reserve banking services to stablecoin issuers in July 2024. It now supports over 80 Web3 companies and serves as a banking partner for licensed virtual asset platforms like HashKey and OSL.

Analysts at Guosen Securities highlighted that with the new ordinance, institutions could apply to become licensed stablecoin issuers by late 2025. Given ZhongAn Bank’s early mover advantage, its parent company stands to gain significantly.

DBS Bank went further, valuing ZhongAn Bank at $2 billion based on its digital asset infrastructure—a value not yet fully reflected in ZhongAn Insurance’s current share price.

Meanwhile, Guotai Junan International’s upgraded license allows clients to trade major cryptocurrencies and stablecoins like USDT directly on its platform. This expansion enables comprehensive services including trading, advisory, and issuance of virtual asset-linked products.

As of June 24, 2025:

Market experts like Xu Kang from Huachuang Securities predict more international brokers will pursue license upgrades, enhancing market depth and liquidity.

The Real-World Asset (RWA) Revolution Fueled by Stablecoins

But what gives stablecoins their “magic”? At their core, stablecoins are digital tokens pegged to stable assets—typically fiat currencies like the US dollar or gold—designed to minimize volatility.

They come in several forms:

Their greatest potential lies in enabling Real-World Assets (RWA) tokenization—a process where physical assets such as real estate, bonds, commodities, or intellectual property are converted into blockchain-based tokens.

According to Ouyang Rihui, Deputy Director at the China Institute of Internet Economy, Central University of Finance and Economics, stablecoins act as a bridge between traditional finance and decentralized systems. By tokenizing RWAs, assets gain:

Boston Consulting Group forecasts that the RWA market could reach $16 trillion by 2030, with stablecoins capturing 30%–50% of that value.

Stablecoins Outpace Traditional Payment Giants

Stablecoins are not just about asset tokenization—they’re redefining payments.

In 2024, stablecoin transaction volume hit $15.6 trillion**, surpassing both Visa ($13 trillion) and Mastercard ($8 trillion) in total value settled. While transaction frequency remains low (just 0.41% of Visa’s volume), the high average transaction size points to dominant use in B2B settlements and crypto trading**.

According to Visa’s own data, over 70% of stablecoin activity supports automated crypto trading rather than everyday payments. However, this also highlights a massive untapped opportunity: expanding stablecoin use into mainstream commerce.

Laying Groundwork for an Offshore RMB Stablecoin?

Hong Kong’s new regulatory framework does more than boost investor sentiment—it may be laying the foundation for a digital offshore RMB stablecoin.

As the world’s largest offshore RMB hub, Hong Kong offers a unique blend of regulatory autonomy and deep integration with mainland China’s financial system. Ouyang Rihui notes that experimenting with RMB-pegged stablecoins in Hong Kong could accelerate Renminbi internationalization, especially when coordinated with China’s central bank digital currency (CBDC), the e-CNY.

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Xiao Feng, Chairman and CEO of HashKey Group, emphasized that while dollar-backed stablecoins aim to reinforce USD dominance, China must proactively explore offshore RMB stablecoin pilots—using Hong Kong as a testbed—to remain competitive in the evolving global monetary landscape.

Risks and Systemic Implications

Despite their promise, stablecoins pose challenges to traditional finance:

Deposit Displacement (“Bank Run Effect”)

If users shift savings from bank deposits into stablecoins, banks could face reduced lending capacity—a phenomenon known as “deposit disintermediation.” This undermines the traditional credit creation model.

Monetary Policy Challenges

Stablecoins mimic cash (M0) in function but operate outside central bank control. Their growth can:

For example, when central banks cut RRR to boost lending, widespread stablecoin adoption can neutralize the effect by draining deposits from the banking system.

Frequently Asked Questions (FAQ)

Q: What is a stablecoin?
A: A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to an underlying asset, such as the US dollar, gold, or other fiat currencies.

Q: Why did Hong Kong’s stablecoin law boost stock prices?
A: The new regulation provides legal clarity and licensing pathways for stablecoin issuance, creating business opportunities for financial firms like ZhongAn Bank and Guotai Junan International that are already positioned in the digital asset space.

Q: Can stablecoins replace traditional banking?
A: Not fully yet—but they can disrupt certain functions like payments and savings. Widespread adoption may force banks to innovate or partner with crypto platforms.

Q: Are stablecoins safe?
A: Regulated fiat-backed stablecoins with transparent reserves (like those under Hong Kong’s new law) are generally safer. However, risks remain around transparency, custody, and regulatory changes.

Q: How do stablecoins support real-world assets (RWA)?
A: They enable fractional ownership and instant settlement of tokenized assets like real estate or bonds, increasing liquidity and access to global investors.

Q: Could China launch an RMB-backed stablecoin?
A: While unlikely domestically due to capital controls, Hong Kong could serve as a pilot zone for an offshore RMB stablecoin aligned with the e-CNY framework.

👉 Stay ahead of the next financial revolution—see how stablecoins are changing everything today.

The rise of stablecoins marks more than a technological shift—it represents a structural evolution in how value is stored, moved, and invested. With Hong Kong leading the charge in regulation and institutional adoption, the stage is set for a new era of finance where digital stability meets real-world impact.