Original Author: Yin Chen Original Editor: Deng Yongjun Original Source: Bloomberg Businessweek In early June this year, Liu Peng, CEO of JD Coinlink Technology (hereinafter referred to as "JD Coinlink"), accepted an exclusive interview with Bloomberg Businessweek (Chinese version). During the interview, he emphasized that stablecoins are not equivalent to cryptocurrencies like Bitcoin and Ethereum, but are akin to mobile payments, both serving as "payment tools." As a veteran in the payment industry, Liu Peng was a core member involved in the design and promotion of WeChat Pay. Subsequently, he was responsible for payment business at large enterprises like Huawei. Now, Liu Peng says he senses a similar "feeling" to the explosive growth of mobile payments — in his view, payment-oriented stablecoins will serve as new financial infrastructure in the Web3 era, playing a "disruptive" positive role in scenarios such as international trade. Decentralized, low transfer costs, transparent and traceable transactions… Stablecoins anchored to fiat currencies are leveraging their many advantages to move from the crypto world to a broader traditional financial system. On May 30, Hong Kong officially gazetted the Stablecoin Ordinance, marking that this international financial center will clearly regulate stablecoin activities related to Hong Kong and the Hong Kong dollar through a licensing system. As early as December 2023, Hong Kong announced it would implement a licensing system for fiat stablecoin issuers; by July 2024, three institutions, including JD Coinlink, will enter the sandbox launched by the Monetary Authority for stablecoin issuance testing. Liu Peng revealed that JD Coinlink's scene testing in the "sandbox" is progressing smoothly, with plans to launch stablecoins pegged to the Hong Kong dollar and other currencies. JD Coinlink was registered in Hong Kong in March 2024 and is a subsidiary of JD Technology Group, which is part of the leading e-commerce enterprise JD Group (9618.HK). Although it has been established for a short time in Hong Kong, Liu Peng believes that one of JD Coinlink's first-mover advantages is having a "cold start" scenario from zero to one, namely the JD e-commerce ecosystem. The group has not disclosed the specific number of third-party merchants on the platform, but Liu Peng mentioned during the Hong Kong Fintech Week in October 2024 that if compliant stablecoins can be issued, "a large number of merchants on the JD platform" can use stablecoins for upstream and downstream settlements to improve efficiency and manage funds more flexibly overseas. In fact, in a market where USDT and USDC account for more than 80% of dollar stablecoins, stablecoins issued by licensed issuers in Hong Kong need to find additional attractions, including use cases, in addition to their "compliance" advantage. Among them, cross-border payments are undoubtedly a place where many stablecoin issuers can "show their talents." At the same time, retail payments are also positively significant in enhancing the market penetration and brand building of stablecoins. Starting from August 1 of this year, the Stablecoin Ordinance will officially take effect. Globally, regions such as Singapore, the EU, and the United States have successively incorporated payment-type stablecoins into regulation, and this existing stablecoin market, currently about $250 billion in size, is becoming increasingly hot. Looking to the future, will compliant stablecoins drive a change in payment paradigms, evolving mobile payments from "offline to online" to further "online to on-chain"? Can Hong Kong, with its rapid legislation, leverage stablecoins to consolidate and enhance its key position in international trade? In an era where stablecoins are pegged to multiple currencies, how will the global payment and financial system change? In May of this year, JD stablecoins entered the second phase of self-testing in the "sandbox"; what are the latest developments? As of early June, we mainly conducted testing for the Hong Kong dollar stablecoin, and later will carry out tests for other fiat stablecoins. Based on market demand, we expect both stablecoins to be issued simultaneously. Unlike the first phase, which mainly tested product functionality and technical details, the second phase focuses on testing the use of stablecoins in three practical scenarios: cross-border payments, investment transactions, and retail payments. In the cross-border payment scenario, we plan to expand users through both direct and indirect customer acquisition (for example, by cooperating with compliant wholesalers). In the investment transaction scenario, we are negotiating partnerships with globally compliant exchanges to launch JD stablecoins in different regions. The first retail application will be in JD's global sales portal for Hong Kong and Macau, where users will be able to use stablecoins for shopping in JD's self-operated e-commerce scenarios. When does JD Coinlink expect to be issued a stablecoin issuer license, and when will stablecoins be launched on compliant exchanges? What are your thoughts on the initial issuance scale? The specific timeline depends on regulation. We expect to receive a license in the early fourth quarter of this year and simultaneously launch JD stablecoins. JD stablecoins will be issued on a public chain, and anyone will be able to publicly view data such as issuance volume. Currently, the most notable application scenario for stablecoins is cross-border payments, where a large number of transactions already use USDT and USDC. How can compliant stablecoins issued in Hong Kong establish themselves in this market? First, "compliance" itself is the core competitiveness. As regulations are implemented and business progresses, the market's understanding will gradually mature. As a newly issued compliant stablecoin, JD stablecoin's goal is not to "compete" in crypto-native or investment trading scenarios, but to open up new "battlefields," namely connecting the traditional cross-border trade settlement market. This market has many physical enterprises, cross-border trade participants, and payment technology companies that all need safe, compliant, and transparently auditable stablecoin services. Therefore, both product design and customer acquisition methods will be targeted. We expect that international trade in regions such as Asia-Pacific, the Middle East, Africa, South America, and Europe may be the first to use stablecoins issued in Hong Kong for payment settlements. Many fintech companies have achieved cost reduction and efficiency improvement in cross-border payments through blockchain technology and localized strategies. Recently, founders of leading cross-border payment companies have raised doubts, believing that stablecoins have limited value in G10 currency cross-border transactions. What do you think of such views? Stablecoins are a systematic project, not determined solely by a single product. The competitiveness of compliant stablecoins lies not only in low costs, high efficiency, and good experiences but also in a stable custody mechanism, safe clearing channels, and reliable operational logic to safeguard holders' rights. As stablecoin issuers, we are also willing to cooperate with cross-border payment companies to build a stablecoin ecosystem. In JD's ecosystem, which areas will adopt stablecoins first? Outside of JD's existing ecosystem, how will you enhance the market acceptance of JD stablecoins? The global sales portal for Hong Kong and Macau within JD's ecosystem will be the first to use JD stablecoins for payment settlements. Outside of JD's ecosystem, given the differences in scenario characteristics, transaction timeliness, and capital settlement logic across industries, we plan to tailor stablecoin payment solutions for different sectors. Currently, JD stablecoins will reduce transfer times from several days to seconds, and costs will be at least half of traditional transfers, with faster on-chain capital turnover. These advantages are believed to attract participants in international trade to adopt JD stablecoins. Speaking of capital turnover, we are curious how supply chain finance-related services associated with cross-border payments will evolve in the stablecoin payment era. Stablecoin issuers can only issue stablecoins and cannot engage in pledging, lending, or paying interest. Therefore, for supply chain finance services, we will explore cooperation with licensed institutions that have the relevant qualifications. From the perspective of solution design, we are sorting out the scenarios of JD's international logistics. Theoretically, under the premise of authorization from all parties, small and medium-sized enterprises going overseas can put (overseas) warehouse order data on-chain and use stablecoins for payments and financing, significantly improving the efficiency of the entire process. Of course, everything must comply with relevant laws and regulations. Similarly in payments, how do you see the differences and similarities between current stablecoin payments and mobile payments you studied years ago? Many people mistake payment-type stablecoins for cryptocurrencies like Bitcoin and Ethereum, which are entirely different. The essence of Web3 stablecoins is the same as that of Web2 mobile payments; both are payment tools aimed at reducing costs and increasing efficiency through advanced technology and business models, improving user experience, and promoting inclusive finance development. Just as mobile payments accelerated the rapid development of the mobile internet industry, will payment-type stablecoins, as Web3 infrastructure, play a similar role? On a technical level, unlike the centralization of mobile payments, stablecoins are based on a decentralized technical architecture; in terms of product structure, stablecoins also have an issuance system that products like WeChat Pay lack. Because of this, the regulation of stablecoins is relatively complex, and it cannot rely solely on compliance in a single region but must coordinate global compliance implementation. Especially in mainland China, where mobile payments have almost "replaced" cash, where might the "critical point" between stablecoins and traditional financial infrastructure be? In just five years, mobile payments have surpassed cash in terms of transaction volume, user coverage, and scenario penetration, with one core driving factor being the low-cost popularization of QR codes. The significant reduction in payment settlement costs, from setting up expensive POS machines to printing out a few QR code stickers, has driven micro and small businesses to fully adopt mobile payments. While it may be too absolute to say that stablecoins can 100% replace the current financial infrastructure, it is indeed true that many physical financial service scenarios will undergo tremendous changes. From the B2B perspective, bulk transactions may be the first to accept stablecoins, especially in cross-border payment scenarios where friction costs are high, exchange rate fluctuations are significant, and transaction times are long. From the B2C perspective, to fully stimulate users' motivation to use stablecoin payments, it may require a phenomenal product and application like the "WeChat Red Packet" in WeChat Pay. As a practitioner, how do you think the ecosystem of Hong Kong's stablecoin industry should be improved? The key is to establish a risk-based, pragmatic, and flexible open ecosystem in accordance with the requirements of the Stablecoin Ordinance, where regulators, issuers, wholesalers, scenario providers, users, and investors must cooperate with each other. Capital settlement is not only the final link of all businesses but also the beginning of business. We need to seize this breakthrough, leveraging Hong Kong's role as an international financial center and trade center to expand the circulation and use of stablecoins issued in Hong Kong in multiple regions, further transforming Hong Kong into an international stablecoin settlement hub. Hong Kong is not only a global trade center but also an offshore RMB hub. Will there be an offshore RMB stablecoin issued here? In terms of product technology, the difference in issuing offshore RMB stablecoins and Hong Kong dollar stablecoins is minimal. Moreover, potential application scenarios for offshore RMB stablecoins are already in place, such as the Belt and Road Initiative. JD Coinlink has always supported and promoted the issuance of offshore RMB stablecoins in the future, but we must consider not only commercial logic but also legal compliance and other comprehensive factors. Ultimately, whether offshore RMB stablecoins can be issued will still depend on mainland regulatory approval.