Morgan Stanley: HK Stablecoins Can Boost Yuan Global Use

Morgan Stanley has highlighted Hong Kong dollar stablecoins as a potential bridge between China’s digital yuan (e-CNY) and the global digital asset ecosystem.

According to Laura Wang, the firm’s Chief China Equity Strategist, stablecoins backed by the Hong Kong dollar could facilitate cross-border investment, real-time transactions, and yuan internationalization without breaching mainland capital controls. The development comes as Hong Kong’s new stablecoin ordinance, effective August 1, 2025, introduces a regulated framework for issuing and using stablecoins. This framework enables low-cost, real-time cross-border payments, making the region a critical testing ground for yuan-linked digital finance. The People’s Bank of China is also trialing the e-CNY in Hong Kong for international payment flows.

Key Highlights

• Hong Kong’s stablecoin law enables real-time cross-border yuan flows
• Morgan Stanley sees HK stablecoins as a bridge to global assets
• JD.com and Standard Chartered eye issuance under new regulations

Wang explained that investors could use Hong Kong dollar stablecoins to convert USDT or USDC into e-CNY, creating seamless pathways to invest in Hong Kong-listed assets and tokenized securities. This could help overcome long-standing barriers to RMB internationalization, which has been limited by China’s managed exchange rate and strict capital control.

Despite decades of efforts—including RMB clearing banks in 25 countries and swap lines with 40— the yuan still accounts for just 2.5 percent of global currency use compared to the US dollar’s 66 percent. Morgan Stanley argues that Hong Kong’s stablecoin framework could circumvent structural constraints, offering a “pathway for yuan-linked capital flows.”

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With 99 percent of the $250 billion global stablecoin market pegged to the US dollar, the Hong Kong model may create a viable alternative. Institutions such as JD.com and Standard Chartered are already exploring stablecoin issuance, signaling strong interest in this regulated offshore channel.