Hong Kong-based FinTech company AnchorX has built the HKD-backed stablecoin, AxHKD, which will initially be launched on Conflux Network. Conflux Network has played a pivotal role in the successful beta-testing of AxHKD. This collaboration between Conflux Network, the only regulatory-compliant public blockchain in China, and AnchorX, a local fintech company, marks a significant stride towards enhancing the practicality of digital currencies for everyday transactions.
Background: Conflux serves as a conduit for decentralized economies, bridging borders and protocols. Its unparalleled features and proven regulatory compliance in China offer a distinct advantage to projects seeking to establish and grow their presence in Asian markets.
Notably, Conflux has previously engaged in collaborations with renowned global brands and regional government entities on blockchain and metaverse initiatives. These partnerships include notable entities such as the city of Shanghai, World Mobile, McDonald’s China, and Oreo.
The collaboration with AnchorX underscores Conflux Network’s commitment to providing cutting-edge technology solutions, boasting superior scalability, security, low latency, and cost-effectiveness. By leveraging these attributes, Conflux Network empowers AnchorX to launch AxHKD with the assurance of robust distributed ledger technology and cybersecurity measures.
- Commenting on the partnership with AnchorX for the launch of AxHKD on Conflux Network, Fan Long, Founder of Conflux, said: “This collaboration represents a significant milestone in the fusion of traditional finance and the Web3 realm, enhancing the practicality of digital currencies for everyday transactions.”
- “AxHKD is poised to play a pivotal role in weaving the Hong Kong Dollar into the fabric of the Web3 ecosystem, driving innovation and financial inclusion,” Fan added.
AxHKD is designed to maintain a 1:1 peg to the HKD, backed by high-quality liquid asset reserves held in segregated trust arrangements by regulated financial institutions in Hong Kong. OKLink Trust, a strategic partner of AnchorX, provides custodian services for the AxHKD issuance, ensuring the security and integrity of the stablecoin.
The strategic significance of AxHKD extends beyond its stability and security. AnchorX envisions two primary applications for the stablecoin.
- Firstly, as a catalyst for global payments, AxHKD facilitates cross-border transactions between Hong Kong/mainland China and the global market, particularly benefiting Belt and Road partners with less developed banking infrastructures.
- Secondly, AxHKD serves as a reliable fiat-on-chain instrument for virtual asset trading, fostering innovation in Real-World Assets and bridging the gap between traditional and digital assets in Hong Kong.
Byron Wong, Chief Compliance Officer at AnchorX, emphasized the importance of regulatory alignment, stating, “Hong Kong has adopted one of the most proactive approaches to stablecoin regulation globally. We want to ensure that AxHKD tightly aligns with the proposed stablecoin standards.”
“We will also explore applying for participation in the upcoming regulatory sandbox and hope to contribute our first-hand practical insights to the formation of a successful stablecoin regulatory regime,” Byron added.
The Big Picture: The announcement comes amidst recent initiatives by Hong Kong authorities to propose a regulatory regime for stablecoin issuers. The Financial Services and the Treasury Bureau, in conjunction with the Hong Kong Monetary Authority (HKMA), released a Consultation Paper in December 2023 to gather public comments on the proposed legislation. This regulatory momentum underscores the growing recognition of stablecoins as a vital component of the financial ecosystem.