Hong Kong lawmaker wants CBDC with Defi features

• In an effort to come up with new ideas for a central bank digital currency, Hong Kong officials are thinking about releasing a CBDC in the form of a stablecoin supported by the government

• Wu Jiezhuang, a member of the Legislative Council of the Hong Kong Special Administrative Region, has proposed this action.

Legislators in Hong Kong have suggested that the government create a stablecoin version of the digital Hong Kong dollar that is connected to decentralised finance (DeFi) networks.

Wu Jiezhuang, a member of the Legislative Council for the Hong Kong Special Administrative Region, believes that turning the e-HKD into a stablecoin would encourage the use of “cutting-edge” innovations like Web3.0.

According to Wu Jiezhuang in an interview with China Blockchain News on January 5, turning e-HKD into a stablecoin has the capacity to efficiently solve the dangers connected to virtual assets in Web3.

In his interview with Lianxin, Wu Jiezhuang said that Hong Kong may create a virtual asset regulatory agency, create the digital HK dollar as a stable economy option, and enact laws to prevent cyber theft in order to win over investors towards the Web3 sector.

According to the legislator, a design for the Hong Kong digital currency will aid the government in gaining the trust of investors in the Web3 industry.

According to Thomas Moser, a member of the Swiss National Bank’s governing board, a CBDC may offer Defi more security and reduce the dangers connected with its expansion in September 2022.

According to reports, Hong Kong has been taking action to efficiently manage virtual assets. Recently, financial service providers in Hong Kong apparently began to provide services to normal investors.

Ahead of new regulations, brokers and investment managers in the area are reportedly seeking guidance on licensing requirements.

Returning to the latest Web 3 development in Hong Kong, Jiezhuang emphasised that the stablecoins that are currently in circulation are granted by private companies and are not regulated by the government, quoting the inability of a number of stablecoin projects in 2022 and their detrimental effects on the cryptocurrency market.

It is significant to note that Wu Jiezhuang is the most recent representative of the government to highlight the possible advantages of merging CBDC and DeFi. 

Wu Jiezhuang is also one of the founders of G-Rocket, a startup accelerator that seeks to lure 1,000 Web3 companies to the city-state over the course of three years. According to him, the Hong Kong government should examine if the creation of digital Hong Kong dollars may be linked to decentralised finance and develop into a major infrastructure element of the trading platform for virtual assets.