A New Initiative in Hong Kong Opens Legal Access to Stablecoins for Mainland China Residents
Flare, a Layer 1 blockchain, and Red Date Technology, a decentralized cloud infrastructure company, have announced two pilot programs in partnership with virtual asset firm IDA.
The first test will allow users to anonymously register for a regulated stablecoin app, while the second will enable the purchase of tokenized financial products using stablecoins.
This development comes at a critical moment, as Hong Kong prepares to unveil new stablecoin regulations permitting digital currencies on public blockchains.
With the introduction of this KYC (Know Your Customer) solution test, Mainland China residents will, for the first time, be able to legally own wallets on public blockchains. They will also be able to transact using stablecoins such as the HKDA, a Hong Kong dollar-pegged stablecoin issued by IDA.
This project is being viewed as a potential stepping stone in China’s long-term strategy to integrate blockchain technology.
Hong Kong Tests Anonymous Registration with Chinese Blockchain System
While China maintains strict regulations on cryptocurrency trading for its residents, this has not stopped the nation from heavily investing in blockchain technology.
While Crypto Trading Is Popular, State-Supported Projects Focus on Corporate and B2B Use Cases
Blockchain projects in China tend to be permissioned rather than permissionless. Additionally, NFT initiatives, including those launched by local museums, are mandated to focus solely on collectibility rather than speculation.
The pilot tests being conducted in Hong Kong leverage the China Real-Name Decentralized Identifier System (RealDID) for anonymous registrations.
This blockchain-based identification system, launched in China last December, is managed by the Blockchain-Based Service Network (BSN), supported by Red Date Technology and the First Research Institute of the Ministry of Public Security.
USDT and USDC Stablecoins Are Left Out of the New Initiative
In China, regulations require users of digital platforms to register using their real names. However, the RealDID technology is reshaping this requirement.
This system allows users to maintain their anonymity from businesses and other platforms while simultaneously complying with legal identification requirements.
In Hong Kong, RealDID is enabling access to stablecoins and other token-based financial products without requiring users to provide documents like passports or bank statements.
It is worth noting, however, that widely recognized stablecoins such as those issued by Tether (USDT) and Circle (USDC), which are pegged to the US dollar, are not included in this new Hong Kong initiative.
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