Conflux Network is partnering with fintech firm AnchorX to launch AxHKD, a Hong Kong dollar-pegged stablecoin, as early as Q2 2024. This move comes on the heels of the Hong Kong Monetary Authority’s (HKMA) launch of a regulatory sandbox for stablecoin issuers last week.
Q2 Launch Targeted, Subject to Regulations
Fan Long, Conflux CEO, expressed optimism about the launch timeframe, stating, “We hope they [HKMA] could push it as soon as possible. If it’s going fast, maybe in Q2, people will be able to get them from exchanges, which is the fastest possibility.” However, he acknowledged that the final timeline depends on the progress of the regulatory sandbox.
The HKMA’s sandbox provides guidance for firms seeking to issue stablecoins in Hong Kong. This follows a consultation document released by the HKMA on February 29th regarding regulations for stablecoin issuers. The Financial Services and Treasury Bureau proposed that stablecoin issuers pegged to fiat currencies require HKMA licenses.
Addressing Market Demand for HKD Stablecoin
The dominance of US-dollar pegged stablecoins has led some financiers to question the ability of authorities to maintain local currency pegs. Alessio Quaglini, CEO of Hong Kong-based Hex Trust, expressed his doubts about the necessity of an HKD stablecoin, stating, “I am also thinking if we really need HK dollar stablecoin.”
The Conflux-AnchorX partnership aims to address this potential market demand by introducing AxHKD. This Hong Kong dollar-backed stablecoin will maintain a 1:1 peg through a 1:1 trading band with the HKD. The entire system will be backed by reserves of highly liquid assets.
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