Stablecoin vs Cross-border Payment Channels, are they "competitors", "alternatives" or just fine on their own?

Source: Lawyer Xiao Za

Recently, benefiting from the release of positive regulatory signals, major companies have announced plans to enter the "stablecoin" sector. Overnight, this concept, which was once closely tied to cryptocurrencies and often appeared alongside news of money laundering and cross-border cybercrime, has quickly become the new "trend" in both the crypto industry and traditional finance, attracting a rush of interest.

But coincidentally, on June 22, 2025, with the joint promotion of the People's Bank of China and the Hong Kong Monetary Authority, the Cross-Border Payment System officially went live. The institutional barriers between Hong Kong and the mainland of our country have collapsed, and the convenience reform of small-value transfers allowing for instant transactions has enabled the public to truly experience benefits and convenience. Since the Cross-Border Payment System is so useful, do we still need stablecoins?

Today, Sister Sa's team will discuss in detail with partners the similarities and differences between "stablecoins" and traditional financial payment tools, as well as whether the two are in a "competitive" relationship.

1. Clarification of Two Concepts

First of all, what is a stablecoin? In the simplest terms, a stablecoin is a type of cryptocurrency issued by a specific organization or individual, backed by a fiat currency of a certain country as the underlying asset (value basis). Technically, it is not much different from cryptocurrencies like BTC and ETH, but it excels in being publicly available, transparent, and stable without fluctuations, making it a "general equivalent" in the crypto world that can serve as a payment tool or a value measurement tool. Therefore, partners can actually view stablecoins as a special type of unofficial "currency."

Secondly, what is Cross-Border Payment Gateway? To explain in the simplest terms, the Cross-Border Payment Gateway refers to the "combination" of the Mainland Online Payment Interbank Clearing System (IBPS) and the Hong Kong Faster Payment System (FPS). By connecting the two, it can solve the problem of fund cross-regional payments at the lowest cost. For example, currently, partners only need to use the Cross-Border Payment Gateway to directly achieve small transfers without converting Renminbi to Hong Kong dollars. Remittances that used to take half a day to arrive can now basically be done in seconds, significantly reducing transaction and payment costs.

Currently, according to the news from the Hong Kong Securities and Futures Commission, stablecoins are still in the testing phase, and no issuing entity has successfully emerged from the sandbox to enter the global market. In other words, compliant and regulated stablecoins are still in the early stages of development. On the other hand, cross-border payment channels have already brought real convenience to the public, and many partners will be able to use them soon.

2. Stablecoins vs Cross-border Payment Channels, Are They "Competitors"?

This is one of the questions that the Sa Sister team's partners have asked the most recently. Although in practical terms, both are means of payment and payment tools, they fundamentally have significant differences, and there are also considerable variations in future development and application scenarios.

In essence, as mentioned earlier, stablecoins are essentially a type of "general equivalent" and a special form of non-legal tender "currency"; while cross-border payment channels are a convenient payment system developed based on the existing legal currency system for cross-regional transactions (mainland China and Hong Kong). Therefore, simply put, the two are not "competitors," but in terms of application scenarios, there is indeed some overlap.

Currently, the application scenarios of cross-border payment channels are mainly as follows:

1. Domestic residents can remit funds to bank accounts in Hong Kong, choosing to remit in RMB and receive in RMB or HKD, commonly known as the "Southbound Remittance Facilitation Service";
2. The "Northbound Remittance Service" for Hong Kong residents transferring to Mainland bank accounts can be initiated in either Hong Kong dollars or Renminbi, with funds arriving in Renminbi.
3. Individuals and legal entities, including institutions, can choose bilateral local currency or bilateral RMB remittances, commonly known as "two-way cross-border RMB payment business", for example, when Lao Wang needs to pay tuition for his son studying at the University of Hong Kong.

Sister Sa's team particularly reminds that there are limits on remittances at present, and only small remittances can be processed. For the situation from Hong Kong to the mainland, the remittance limit is 10,000 HKD per person per day at each bank, and 200,000 HKD per person per year at each bank; for remittances from the mainland to Hong Kong, it is calculated according to the current personal annual foreign exchange purchase facilitation limit of 50,000 USD (which is subject to the foreign exchange control limit).

As for stablecoins, currently there is not much information disclosed by the three companies in the Hong Kong regulatory sandbox, and each company's application scenarios are different. Taking the collaboration of Animoca Brands, Standard Chartered Bank, and Hong Kong Telecommunications as an example, it has already entered the later stage of sandbox testing, primarily issuing a stablecoin pegged to the Hong Kong dollar.

3. Some Latest News and Policy Judgments Regarding the Hong Kong Stablecoin License Application

Since the Hong Kong Special Administrative Region's "Stablecoin Regulation" has been implemented and will come into effect on August 1, the team has received a large number of inquiries about how to apply for a license. In fact, partners need not panic; although the Hong Kong Monetary Authority will start accepting license applications after August 1, this time the licenses will not be awarded on a first-come, first-served basis, but rather to those who are "reliable."

First of all, the number of licenses to be granted this time is very limited, possibly only a single digit. The Monetary Authority has provided a clear regulatory approach and positioning: stablecoins are not tools for investment or speculation, but rather one of the payment tools utilizing blockchain technology (positioned as financial infrastructure), and there is no appreciation potential in themselves. In other words, whether a license can be granted depends on whether the applicant has the capability and intention for long-term large-scale investment in infrastructure construction, and whether they can provide sufficiently reliable application scenarios to impress the Monetary Authority.

Secondly, the three entities that have already entered the sandbox are undoubtedly ahead, but this does not mean that entering the "sandbox" in the future is a prerequisite for obtaining a license, nor does it mean that the participating institutions that have entered the "sandbox" will necessarily obtain a license.

In summary, the opportunities given by the times may only come once. The Sa Jie team does not recommend rushing ahead without sufficient preparation; sharpening the knife does not delay the work of chopping wood. The issuance of stablecoin licenses will inevitably go through a long assessment period, and as long as it is sufficiently "reliable," being a latecomer does not mean it is impossible to succeed first.

IV. Final Words

Many partners are asking what specific conditions need to be met to apply for a stablecoin license? What are the specific processes? In fact, the Monetary Authority has not provided a clear guideline at present. According to the information from Sister Sa's team, the guiding documents are still in the consultation period, and partners are encouraged to pay more attention.

So, at this stage, if you want to prepare in advance, are there any reference standards? Of course, there are. The regulatory authority in Hong Kong has clarified that the template for the regulation of stablecoins in Hong Kong comes from the section on stablecoins in the "Global Crypto Asset Activity Regulatory Framework" published by the Financial Stability Board (FSB) under the G20 in 2023. Therefore, at this stage, if partners want to prepare in advance, it is recommended to refer to this standard to advance specific compliance work.

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