Last July Standard Chartered Bank Hong Kong announced a collaboration with Hong Kong Telecom (HKT) and web3 firm Animoca Brands to explore stablecoin issuance as part of a Hong Kong sandbox. Now the bank says it is creating a joint venture with the same partners in order to apply for a license with the Hong Kong Monetary Authority under its new stablecoin regulations. The joint venture intends to be one of the first issuers. Hong Kong published a Bill late last year.
Each of the partners brings specialist skills to the venture. Standard Chartered can contribute bank grade infrastructure and governance. It already provides services to stablecoin issuer Paxos outside the United States. Plus it has participated in various Hong Kong digital currency initiatives including for tokenized deposits, wholesale and retail CBDC.
It’s hard to think of another G-SIB bank that has leaned into tokenization and crypto with the breadth of engagement that Standard Chartered has shown. That includes businesses incubated by the bank’s SC Ventures, including Zodia Custody, Zodia Markets which is very involved with stablecoins, and tokenization firm Libeara. Additionally, the bank has invested in traditional finance initiatives such as SWIAT for tokenization and Partior for tokenized cross border payments. Other Partior participants include DBS Bank, Deutsche Bank and JP Morgan.
“Digital assets are here to stay and the development of different forms of tokenised money is integral to the advancement of this industry,” said Bill Winters, Standard Chartered Group CEO. “As public chain instruments with proven use cases, stablecoins play a critical role in the overall digital asset ecosystem. Standard Chartered’s bank-grade infrastructure, governance and global reach mean that we are in a good position to materially contribute to the development of the ecosystem being built in Hong Kong and globally.”
Animoca Brands is the founder of The Sandbox metaverse and other projects, as well as being one of the most prolific web3 investors during the 2021/22 web3 boom. Hence, the Hong Kong firm can enable the stablecoin to tap into crypto native opportunities, which are invariably part of all go-to-market strategies.
Hong Kong Telecom’s role in stablecoin JV
As part of the stablecoin sandbox, Hong Kong Telecom aimed to explore stablecoins for domestic and cross border payments. It provides consumer and merchant payment solutions and has expertise in mobile wallets. So far stablecoins in general have proven to be useful for cross border payments, but have yet to be adopted for every day payments. Hence, HKT could be an interesting test of that.
“HKT is dedicated to leveraging technology to support our dynamic consumer and merchant ecosystem, aiding merchants in navigating the constantly evolving retail landscape,” said Susanna Hui, Group Managing Director, HKT. “We believe that issuing an HKD-linked stablecoin will enhance payment efficiency, streamline transactions, and provide greater security and transparency through advanced Web3 innovations, ultimately benefiting the broader retail sector.”
Societe Generale FORGE is one of the highest profile bank-linked stablecoin issuers. Meanwhile, Deutsche Bank has also formed a joint venture, AllUnity, which expects to launch a stablecoin this year, subject to regulatory approval. There are more than 20 bank linked stablecoin initiatives.
Ledger Insights Research has published a report on bank-issued stablecoins and tokenized deposits featuring more than 70 projects. Find out more here.
