Hong Kong’s Legislative Council passed the Stablecoin Bill, paving the way for a regulated framework that could position the region as a global leader in digital assets and Web3 development.

In a May 21 post on X, Legislative Council member Johnny Ng Kit-Chong said the bill had passed its third reading, clearing the final hurdle for adoption.

“It is expected that by the end of this year, major institutions will be able to apply to the Hong Kong Monetary Authority to become licensed stablecoin issuers,” Ng said.

Image of the legislative assembly session. Source: Johnny Ng Kit-Chong

According to the new Hong Kong legislation, stablecoins must be backed by fiat currency as underlying assets. Ng said Hong Kong is welcoming “global enterprises and institutions interested in issuing stablecoins to apply in Hong Kong,” offering to personally assist with introductions and collaboration:

“I am also happy to facilitate connections and collaborate with all stakeholders to advance the development of Web3 in Asia and globally, with Hong Kong at the center.“

Related: Hong Kong introduces crypto staking rules, reaffirms Web3 commitment

Hong Kong aims to become a Web3 powerhouse

Ng said the legislation marks the first step on the road toward building Web3 infrastructure in Hong Kong. “The most crucial step is to develop more real-world applications.”

Ng said stablecoin adoption has the potential to drive innovation in retail payments, cross-border trade and peer-to-peer transactions.

He added that he encourages the development and adoption of stablecoins, since “they represent a major financial innovation.” Regarding enhancing market stability, Ng suggested distributing interest earnings to stablecoin holders.

Related: HashKey receives Hong Kong approval to offer crypto staking services

Interest for stablecoin holders

According to Ng, “providing interest will strengthen the competitiveness of stablecoins.” This increased competitiveness, he explained, incentivizes broader participation and expands stablecoin market share, which supports what he views as sustainable growth.

Ng’s remarks that yield-bearing stablecoins are more competitive follow recent positive data. Research indicates that yield-bearing stablecoins have soared to $11 billion in circulation, representing 4.5% of the total stablecoin market, a steep climb from just $1.5 billion and a 1% market share at the start of 2024.

Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight

Guatemala’s largest bank, Banco Industrial, has integrated crypto infrastructure provider SukuPay into its mobile banking app, allowing locals to more easily receive remittances powered by blockchain technology. 

SukuPay’s infrastructure has been fully embedded inside the Zigi payment app, allowing Guatemalans to receive funds from the United States instantly for a $0.99 flat fee, the company disclosed on May 21. 

Users of the Zigi app do not need a crypto wallet or an International Bank Account Number (IBAN) to receive the funds, the company said. 

SukuPay CEO Yonathan Lapchik told Cointelegraph that the “key to mainstream adoption of blockchain technology is making it invisible to the end-user” so that there are no technical barriers. 

“That’s the only way we’ll scale blockchain to billions of people — by building the rails, not forcing people to learn how they work,” said Lapchik.

Established in 1968, Banco Industrial has more than 1,600 service locations throughout Guatemala. As of 2023, it had over 150 million Guatemalan quetzals in assets, equivalent to roughly $20 million US. SukuPay said its integration with Zigi marks one of the first crypto-native protocols to be used inside a major Latin American retail bank.

Banco Industrial has a long-term issuer default rating of BB. Source: Fitch Ratings

The bank also has operations in Honduras, Panama and El Salvador and is a key player in local remittance markets.

Related: Bitcoin treasury adoption grows in LATAM, mirroring US strategic BTC reserve plan

Remittances are lifelines for Latin America

Remittances, or money sent by migrants to their home countries, play a vital role in Guatemala and the broader region. 

The Inter-American Development Bank projected that remittances to Latin America and the Caribbean would total approximately $161 billion in 2024. Monthly remittances typically range from $131 to $648, representing between 6% and 23% of the sender’s average income.

“Remittances are lifelines in this region, but they’re broken,” Lapchik told Cointelegraph. 

“Guatemala alone sees $21 billion in remittances every year, and families are losing 6% to 10% of that to fees and delays. These are people sending $300, $400 a month, and they can’t afford to wait days or pay that much just to get money home,” he said, adding:

“Crypto solves this when it’s used the right way. It lets us move money instantly and at a fraction of the cost, integrated into the bank apps people already use.”

Latin America is the second-fastest growing region in terms of crypto adoption, though Guatemala lags behind regional leaders Argentina, Brazil, Mexico, Venezuela and Colombia, according to a 2024 Chainalysis study.

The study cited stablecoins as a primary adoption driver in the region. 

Crypto adoption in Latin America by total value received. Source: Chainalysis

Lapchik said stablecoins facilitate cross-border transactions more easily, but that “people don’t wake up saying, I need a stablecoin.’” 

“Stablecoins are just the best way to make that happen,” he said.

Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight

Stablecoin adoption among institutions could surge as the United States Senate prepares to debate a key piece of legislation aimed at regulating the sector.

After failing to gain support from key Democrats on May 8, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act passed the US Senate in a 66–32 procedural vote on May 20 and is now heading to a debate on the Senate floor.

The bill seeks to set clear rules for stablecoin collateralization and mandate compliance with Anti-Money Laundering laws.

Related: German gov’t missed out on $2.3B profit after selling Bitcoin at $57K

“This act doesn’t just regulate stablecoins, it legitimizes them,” said Andrei Grachev, managing partner at DWF Labs and Falcon Finance.

“It sets clear rules, and with clarity comes confidence. That’s what institutions have been waiting for,” Grachev told Cointelegraph during the Chain Reaction daily X spaces show on May 20, adding:

“Stablecoins aren’t a crypto experiment anymore. They’re a better form of money. Faster, simpler, and more transparent than fiat. It’s only a matter of time before they become the default.”Source: Cointelegraph

Senate bill seen as path to unified digital system

The GENIUS Act may be the “first step” toward establishing a “unified digital financial system which is borderless, programmable and efficient,” Grachev said, adding:

“When the US moves on stablecoin policy, the world watches.”

Republican Senator Cynthia Lummis, a co-sponsor of the bill, also pointed to Memorial Day as a “fair target” for its potential passage.

Grachev said regulatory clarity alone will not drive institutional adoption. Products offering stable and predictable yield will also be necessary. Falcon Finance is currently developing a synthetic yield-bearing dollar product designed for this market, he noted.

Yield-bearing stablecoins issuance. Source: Pendle

Yield-bearing stablecoins now represent 4.5% of the total stablecoin market after rising to $11 billion in total circulation, Cointelegraph reported on May 21.

Related: Stablecoins seen as ideal fit for real-time collateral management

GENIUS Act regulatory gaps don’t address offshore stablecoin issuers

Despite broad support for the GENIUS Act, some critics say the legislation does not go far enough. Vugar Usi Zade, the chief operating officer at Bitget exchange, told Cointelegraph that “the bill doesn’t fully address offshore stablecoin issuers like Tether, which continue to play an outsized role in global liquidity.”

He added that US-based issuers will now face “steeper costs,” likely accelerating consolidation across the market and favoring well-resourced players that can meet the new thresholds.

Still, Zade acknowledged that the legislation could bring greater “stability” to regulated offerings, depending on how it is ultimately worded and enforced.

Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight