007

IKOL Note #007
A coin for paying at more than 100,000 merchants. No interest for holding it. And HSBC's next step is a separate product: a money market fund share class that hasn't launched yet.
On October 23, HSBC launched RedCoin (RCHKD), a Hong Kong dollar stablecoin, on its PayMe app. In the coming days, more than 3.3 million PayMe users will be able to activate a wallet and use it to pay friends and shops. What the coin will never do, under Hong Kong law, is pay its holders interest. The coin, the launch rewards and the planned fund sit close together, but they are not the same thing.
【A coin built for paying】
[Documented] According to HSBC's release (Oct 23):
· RedCoin is "the bank's first stablecoin," denominated in Hong Kong dollars and issued by The Hongkong and Shanghai Banking Corporation under a stablecoin issuer licence granted by the HKMA in April.
· "In the coming days, over 3.3 million PayMe users will be able to activate a stablecoin wallet in-app" for peer-to-peer payments and payments "at more than 100,000 merchants through PayMe."
· "To celebrate the launch, exclusive PayMe transaction discounts, alongside RewardCash, will be offered."
· Later this year, HSBC plans to let customers "subscribe to tokenised investment products via HSBC RedCoin," including "a soon-to-be-launched share class of HSBC's long-running HKD money market fund."
【The rule: no interest at all】
[Documented] The HKMA's Guideline on Supervision of Licensed Stablecoin Issuers (August 2025) puts it under a heading that leaves little doubt: "Non-interest bearing."
「"Section 15 of Schedule 2 to the SO stipulates that a licensee must not pay, or permit to be paid, any interest in relation to the specified stablecoins it issues. A licensee should not pay interest or interest-like incentive in any form to specified stablecoin holders, save that a licensee may offer marketing incentives that do not amount to payment of interest." (para 2.6.1, p. 8)」
Interest is defined by how it arises from holding: any return represented to arise from holding the coins on the basis of "(i) the length of the period during which the holder holds" them, "(ii) the par value," or "(iii) the market value." Income from managing the reserve assets goes to the issuer, not to holders. (paras 2.5.3, 2.6.1, pp. 8–9) In the Guideline, "must" marks a statutory requirement and "should" the HKMA's expectation. (para 1.2)
[Analysis] The US rule in Note #005 bans issuers from paying interest or yield "solely" for holding, using or retaining a stablecoin, and much of the American fight is over that one word. Hong Kong's statute has no "solely." The HKMA then extends the ban to "interest-like" incentives, with one carve-out: marketing incentives that are not interest.
【So what are the launch rewards?】
[Documented] HSBC describes its launch offer in one sentence: "exclusive PayMe transaction discounts, alongside RewardCash." The release gives no further terms.
[Analysis] As described, the offer is tied to transactions and to the launch, not to how long or how much RedCoin someone holds, which are the tests the Guideline uses to define interest. Whether a particular offer stays on the "marketing incentive" side of the line is for the HKMA to judge, and its full terms are not in the release. What the rule does make clear is the direction: rewards for using the coin can exist; returns for holding it cannot.
【Returns live somewhere else】
[Documented] The fund route is a plan, not a product yet: HSBC says customers will be able to use RedCoin to subscribe to tokenized investment products, including the new money market fund share class, later this year.
[Analysis] Note #006 looked at the American version from the other side: SoFi keeps idle money in a tokenized deposit, which can pay interest, and converts it into a stablecoin when it's time to spend. HSBC's plan keeps the stablecoin as the payment tool and points to a fund as a place where money can earn. In both cases the coin itself pays nothing. And a fund is neither a deposit nor interest on the coin: it is an investment with its own terms and risks, and this share class has not launched.
【Before you use it】
· Redemption. The HKMA requires licensees to let holders redeem at par; valid requests must be honored "without charging an unreasonable fee" and, unless otherwise approved, processed "within one (1) business day." Reserves must be worth at least the coins outstanding at all times and kept separate from the issuer's own assets. (Guideline paras 2.2.1, 2.5.1, 3.3.1, 3.3.3) HSBC's release does not describe fees or the redemption path inside PayMe.
· The launch offer. One sentence is all that's public in the release.
· The fund. Timing, minimums, fees and risks are not yet published.
· Which chain. Not named.
· Uptake. 3.3 million is the number of PayMe users who can activate a wallet, not the number who hold RedCoin. We have no usage data.
Would payments alone give you a reason to keep a balance in this wallet? And what would you need to know before using the planned fund alongside it?
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Background: the HKMA granted Hong Kong's first two stablecoin issuer licences on April 10, 2026, to Anchorpoint Financial Limited and HSBC, effective that day, and reminded the public to acquire and use stablecoins "only through regulated channels." HSBC's licence number is FRS02; HSBC Digital Assets Custody holds RedCoin's safekeeping; staff pilots with nearly 100 users preceded launch. The Stablecoins Ordinance (Cap. 656) took effect on August 1, 2025.
Evidence: strong for what RedCoin is and how it can be used (HSBC's own release); strong for Hong Kong's no-interest rule and redemption standards (HKMA Guideline, quoting the Stablecoins Ordinance); the statute itself was read through the Guideline's citations, not directly. Nothing on usage, fees or the fund's terms. Not investment or legal advice; no view on the product.
Sources
1. HSBC, "HSBC RedCoin launches today" (Oct 23, 2026) — https://www.about.hsbc.com.hk/news-and-media/hsbc-redcoin-launches-today
2. HKMA, "Granting of stablecoin issuer licences" (Apr 10, 2026) — https://www.hkma.gov.hk/eng/news-and-media/press-releases/2026/04/20260410-4/
3. HKMA, Guideline on Supervision of Licensed Stablecoin Issuers (Aug 2025), paras 1.2, 2.2.1, 2.5.1, 2.5.3, 2.6.1, 3.3.1, 3.3.3 — https://www.hkma.gov.hk/media/eng/doc/key-functions/ifc/stablecoin-issuers/Guideline_on_supervision_of_licensed_stablecoin_issuers_eng.pdf
4. Hong Kong Government, Stablecoins Ordinance (Cap. 656) commencement (press release, Jun 6, 2025) — https://www.info.gov.hk/gia/general/202506/06/P2025060600275.htm
5. IKOL Notes #005 and #006 — https://x.com/2425247/status/2113155622208418105 · https://x.com/2425247/status/2113481960903549169
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