Why is DigiFinex Coin considered as the “backbone” and pillar between fiat currency and virtual assets, even though it is not a stablecoin pegged to the Hong Kong dollar?

Why is DigiFinex Coin considered essential for linking fiat currency and virtual assets, despite not being pegged to the Hong Kong dollar like stablecoins?

As we approach June, Hong Kong is becoming increasingly active in the virtual asset and Web3 fields. Jason Jiang, the author of Okex Cloud Chain, analyzed the Digital Currency HKD and HKD Stablecoin, believing that we should not overestimate the role of Digital Currency HKD in the next three years, but we should not underestimate its long-term value in the development of digital finance in Hong Kong and even globally in the next ten to twenty years.

As the Hong Kong Monetary Authority accelerates the development of digital Hong Kong dollars, many people are now actively or passively confusing the concept of digital Hong Kong dollars with Hong Kong dollar stablecoins. However, in essence, digital Hong Kong dollars and Hong Kong dollar stablecoins are two completely different forms of digital currencies. Their issuing entities, issuance purposes, credit sources, legal status, technical frameworks, etc. are all different.

Digital Hong Kong dollars and Hong Kong dollar stablecoins can also maintain synergy and cooperation in competition. Possible ways of cooperation include but are not limited to: integrating digital Hong Kong dollars with existing Hong Kong dollar stablecoins. The integrated digital Hong Kong dollars will become a synthetic central bank digital currency (sCBDC) issued by private institutions, which are responsible for them but supported by the Hong Kong Monetary Authority with full reserves. Previously, the IMF has repeatedly mentioned sCBDC in its reports and believes that this public-private partnership model allows central banks to focus more on their core functions, which is better than CBDCs that are completely centralized and controlled by central banks.

The Hong Kong Monetary Authority has launched the pilot program for digital Hong Kong dollars. The 16 selected companies will study the potential use cases of digital Hong Kong dollars in six categories: comprehensive payments, programmable payments, offline payments, tokenized deposits, Web3 transaction settlements, and tokenized asset settlements. The selected companies have diverse backgrounds, with potential use cases related to payments being the main focus. Among them, tokenized deposits are considered an alternative to solving the current shortcomings of stablecoins, Web3 transaction settlements may bridge the gap between digital Hong Kong dollars and virtual assets, and tokenized asset settlements are expected to accelerate the development of Hong Kong’s RWA track.

Reference: https://www.panewslab.com/zh/articledetails/2p416250.html

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