Original Author: Yin Chen Original Editor: Deng Yongjun Original Source: Bloomberg Businessweek At the beginning of 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), where he emphasized that stablecoins are not equivalent to cryptocurrencies such as 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." After that, he was responsible for payment business at large enterprises such as Huawei. Now, Liu Peng says he feels a similar "sensation" to the eve of a mobile payment boom—he believes that payment-type 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, transaction transparency and traceability... Stablecoins pegged to fiat currency are leveraging their many advantages to move from the crypto world into a broader traditional financial system. On May 30, Hong Kong officially published the (Stablecoin Regulation), marking that this international financial center will clarify regulations related to stablecoin activities linked to Hong Kong and the Hong Kong dollar through a licensing system. As early as December 2023, Hong Kong announced the implementation of a licensing system for fiat stablecoin issuers; in July 2024, three institutions, including JD Coinlink, entered the sandbox introduced by the Monetary Authority for stablecoin issuers (hereinafter referred to as "the sandbox") to conduct stablecoin-related testing. Liu Peng revealed that JD Coinlink's scenario testing in the "sandbox" is progressing smoothly and plans to launch stablecoins pegged to both 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 a business group under JD Group (9618.HK), a leading e-commerce enterprise in Mainland China. Although JD Coinlink has only been established for a short time in Hong Kong, Liu Peng believes one of its first-mover advantages is having a "cold start" scenario from scratch, namely the JD e-commerce ecosystem. The group has not publicly 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 are issued, "a large number of merchants on the JD platform" could use stablecoins to improve efficiency during upstream and downstream settlements, and manage funds more flexibly overseas. In fact, in a market where USDT and USDC, the two major US dollar stablecoins, account for more than 80%, stablecoins issued by licensed issuers in Hong Kong, aside from their "compliance" advantages, urgently need to find other attractions, including use cases. Among them, cross-border payments are undoubtedly where many stablecoin issuers showcase their capabilities. At the same time, retail payments also have positive significance in enhancing the market penetration and brand building of stablecoins. Starting from August 1 of this year, the (Stablecoin Regulation) will officially take effect. Globally, regions such as Singapore, the EU, and the United States have successively brought payment-type stablecoins under regulation, and the existing stablecoin market, which is approximately $250 billion, is becoming increasingly hot. Looking ahead, will compliant stablecoins drive a paradigm shift in payments, evolving mobile payments from "offline to online" further to "online to on-chain"? Can Hong Kong, with its swift legislation, use stablecoins to solidify and enhance its key position in international trade? In an era where various currency-pegged stablecoins coexist, how will the global payment and financial system change? In May of this year, JD Stablecoin entered the second phase of self-testing in the "sandbox"; what is the latest progress? As of early June, we primarily conducted testing of the Hong Kong dollar stablecoin, and will later conduct testing of other fiat stablecoins. Based on market demand, we anticipate that two types of stablecoins will be issued simultaneously. Unlike the first phase, which mainly tested product features 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 our user base through both direct customer acquisition and non-direct customer acquisition (e.g., collaborating with compliant wholesalers). In the investment transaction scenario, we are negotiating cooperation with globally compliant exchanges to launch JD Stablecoin in different regions. In retail, the first to land will be JD's global sales sites in Hong Kong and Macau, where users can use stablecoins to shop in JD's self-operated e-commerce scenarios. When do you expect JD Coinlink to be granted a stablecoin issuer license and launch stablecoins on compliant exchanges? What are your thoughts on the initial issuance scale? The specific timeline depends on regulation. We expect to receive the license in early the fourth quarter of this year and simultaneously launch JD Stablecoin. JD Stablecoin will be issued on the public blockchain, allowing anyone to publicly access 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 a foothold in this market? First, "compliance" itself is the core competitive advantage, and as regulations are implemented and businesses advance, 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 transaction scenarios but to open new "battlefields," namely connecting the traditional cross-border trade settlement market. This market comprises a large number of physical enterprises, cross-border trade participants, and payment technology companies, all of whom need secure and compliant, transparent and auditable stablecoin services. Therefore, whether in product design or customer acquisition methods, we will have certain targeting. We expect that international trade in regions such as Asia-Pacific, the Middle East, Africa, South America, and Europe will be among 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 localization strategies. Recently, the founder of a leading cross-border payment company raised doubts, believing that stablecoins have limited value in cross-border transactions involving G10 currencies. What do you think of such views? Stablecoins are a systematic project, not determined solely by any single product. The competitiveness of compliant stablecoins lies not only in low costs, high efficiency, and good user experience but also in a stable custody mechanism, secure clearing and settlement channels, and credible operational logic to protect the rights and interests of holders. As stablecoin issuers, we are also willing to collaborate with cross-border payment companies to co-build a stablecoin ecosystem. Within the JD ecosystem, which segments will be the first to apply stablecoins? Outside of the existing JD ecosystem, how will you enhance the market acceptance of JD Stablecoin? The global sales sites for Hong Kong and Macau within the JD ecosystem will be the first to use JD Stablecoin for payment settlements. Outside the JD ecosystem, considering the differences in scenario characteristics, transaction timeliness, and fund settlement logic across different industries, we plan to tailor stablecoin payment solutions for different industries. Currently, JD Stablecoin will reduce transfer time from several days to seconds, and costs will be at least halved compared to traditional transfers, with faster on-chain fund turnover. These advantages are expected to attract participants in international trade to adopt JD Stablecoin. Speaking of fund turnover, we are very curious about how supply chain finance related to cross-border payments will evolve in the era of stablecoin payments. Stablecoin issuers can only issue tokens and cannot engage in pledging, lending, or issuing interest; therefore, for supply chain finance services, we will explore cooperation with licensed institutions with relevant qualifications. From a solution design perspective, we are sorting out scenarios in JD International Logistics. Theoretically, with authorization from all parties, small and medium-sized enterprises going abroad can put (overseas) warehouse orders and other data on-chain and use stablecoins for payment and financing, significantly improving overall efficiency. Of course, everything must comply with relevant laws and regulations. Similarly, in terms of payments, how do you see the differences between current stablecoin payments and mobile payments you studied years ago? Many people equate payment-type stablecoins with cryptocurrencies like Bitcoin and Ethereum, which are fundamentally different. The stablecoins of Web3, like mobile payments of Web2, are essentially payment tools aimed at achieving cost reduction and efficiency improvement, enhancing user experience, and promoting inclusive finance through advanced technology and business models. Just as mobile payments propelled 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 decentralized technological architecture; on a product structure level, stablecoins also include an issuance system, unlike products like "WeChat Pay." Because of this, the regulation of stablecoins is relatively complex, requiring not only compliance in a single region but also global regulatory coordination. Especially in Mainland China, where mobile payments have almost "replaced" cash, where might the "critical point" be for stablecoins and traditional financial infrastructure? Within just five years, mobile payments have comprehensively surpassed cash in terms of transaction volume, user coverage, and scenario penetration, one core driving factor being the low-cost proliferation of QR codes. The significant drop in payment settlement costs, from setting up expensive POS machines to printing a few QR code stickers, has propelled small and micro merchants to fully embrace mobile payments. While it may be too absolute to say that stablecoins can 100% replace the current financial infrastructure, it is true that many physical financial service scenarios will undergo tremendous changes. From a B2B perspective, large transactions may be the first to embrace stablecoins, especially in cross-border payment scenarios with high friction costs, significant exchange rate fluctuations, and long processing times. From a B2C perspective, to fully stimulate users' motivation to use stablecoin payments, it may require a phenomenon-level product and application similar to "WeChat Red Envelopes" in "WeChat Pay." As a practitioner, what do you think should be done to improve the ecosystem of the stablecoin industry in Hong Kong? The key is to establish an open ecosystem that is risk-based, pragmatic, and flexible, in accordance with the requirements of the (Stablecoin Regulation), where regulators, issuers, wholesalers, scenario providers, users, and investors must collaborate with each other. Fund settlement is both the last link of all businesses and the beginning of commerce; we need to grasp this breakthrough point, leveraging Hong Kong's role as an international financial center and trade center to expand the circulation and utilization of stablecoins issued in Hong Kong across multiple regions, further positioning Hong Kong as an international stablecoin settlement hub. Hong Kong is not only a global trade center but also an offshore RMB hub. Will there be an issuance of offshore RMB stablecoins here? In terms of product technology, the differences between issuing offshore RMB stablecoins and Hong Kong dollar stablecoins are not significant. Additionally, the 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 need to consider not only commercial logic but also comprehensive evaluations from legal and compliance perspectives. Ultimately, whether offshore RMB stablecoins can materialize still depends on regulatory approval from Mainland China.