Circle’s Stablecoin Strategy
Circle, the well-known issuer of stablecoins, has confirmed that it has no intention to develop a stablecoin aligned with the Hong Kong dollar at this time. This announcement came from Chen Qinqi, the company’s Vice President for the Asia-Pacific region, during a conversation with the Hong Kong Economic Times. Instead of pursuing HKD-linked stablecoins, Circle aims to enhance the adoption of its existing U.S. dollar-pegged stablecoin, USDC, along with its euro-backed variant, EURC.
Market Context and Regulatory Framework
The backdrop of this decision is the surge of interest from various companies in Hong Kong to obtain licenses for stablecoin issuance based on the Hong Kong dollar. This increased attention follows the introduction of the Stablecoin Ordinance, which took effect on August 1. The newly established legal framework sets out the conditions under which firms can apply for stablecoin issuer licenses from the Hong Kong Monetary Authority.
Currently, institutional investors in Hong Kong can engage with USDC without the need for additional regulations stemming from the Stablecoin Ordinance, as clarified by Qinqi. Meanwhile, Circle maintains a valid license issued by Singapore. Investors looking to procure USDC can do so directly from Circle or via the company’s established partnerships, though retail investors are required to access it through these partners.
International Recognition and Future Plans
Notably, while Circle is not directly regulated in Japan, USDC has been recognized as the first stablecoin approved by Japanese regulators for offering to the public through licensed institutions. Both retail and professional investors in Japan can attain USDC via authorized partners.
In earlier comments, Circle’s CEO, Jeremy Allaire, alluded to potential plans for expansion in Hong Kong, including hiring additional staff and possibly setting up a regional office. However, Qinqi emphasized that there are no immediate steps being taken toward establishing an office or applying for a license under the new legal framework, as the company is still evaluating suitable office spaces.
Market Position and Growth
Recent market data indicates that Circle’s USD-pegged token, USDC, stands as the second largest stablecoin in terms of market capitalization, boasting a value of approximately $75.28 billion, trailing only behind Tether’s USDT. USDC has been witnessing a more rapid growth rate, showing a daily increase of 0.41%, compared to USDT’s 0.06%.
Moreover, Circle leads the market among euro-pegged stablecoins, with its EURC valued at $266.5 million, accounting for over 45% of the total market cap of euro-backed stablecoins, which sits around $570 million. However, EURC still falls short of A7A5, a ruble-backed stablecoin, which leads the non-USD entity market, dominating with a share of more than 40%. To surpass A7A5, EURC needs an additional $213 million in market cap.
The Future of Stablecoins
The stablecoin sector is rapidly evolving, recently reaching a total market capitalization of over $300 billion. Projections from JPMorgan indicate that this market could swell to $2 trillion in the next couple of years, highlighting the growing acceptance and use of stablecoins in the broader financial ecosystem.
