Quinlan Law Firm: From Digital Currency to Legal Tender, the Role of Regulated Stablecoins in Driving Real-World Payments

(Hong Kong, November 27, 2024) - Quinlan & Associates and IDA Finance Hong Kong Limited ("IDA") have jointly released a forward-looking leadership report exploring the potential for regulated stablecoins to evolve into trusted fiat currencies and gain widespread acceptance in real-world applications, particularly in local and cross-border payments.

Link to the report::https://www.idafi.xyz/s/IDA-Thought-Leadership-Publication.pdf

The report, titled From Digital Currency to Legal Tender: the Role of Regulated Stablecoins in Driving Real-World Payments (From Digital Currency to Legal Tender: The Role of Regulated Stablecoins in Driving Real-world Payments), analyzes the current state of stablecoins - their use is mainly limited to the Web3 ecosystem. At the same time, the report provides a vision of the future development of an ideal stablecoin that will be widely used in everyday life. A regulated and non-proprietary stablecoin is expected to provide strong user protection and build trust, thus expanding from the Web3 space to the mainstream financial system.

In today's digital asset landscape, stablecoins have gained widespread popularity for their ability to stably reflect the value of fiat currencies," said Lawrence Chu, Co-Founder and CEO of IDA, "Combined with the advantages of blockchain's programmability, stablecoins can offer cost efficiencies, enhanced transparency, 24/7 service, and faster processing speeds than traditional financial systems can. processing speeds. Because of these features, we see great potential for stablecoins to play a key role in the real financial economy."

To capitalize on this potential, a growing number of non-Web3 companies are also issuing their own stablecoins. For example, PayPal, the world's leading online payment provider, launched PYUSD, while Sony Bank plans to issue a stablecoin pegged to the Japanese yen on the Polygon blockchain. Despite the growing supply, widespread adoption of stablecoins by merchants and consumers in the real economy remains limited.

Benjamin Quinlan, CEO and Managing Partner of Quinlan & Associates, explains, "Despite the fact that it is cheaper to pay for goods online using digital currencies than through typical payment methods such as e-wallets or credit cards, many users remain hesitant. This hesitation stems largely from regulatory uncertainty, which 81% merchants see as a major barrier to accepting digital assets, such as stablecoins, as a mainstream payment option."

As a result, stablecoins still have limited utility for real-world applications.

"While well-known consumer brands such as Tag Heuer and Adidas have begun accepting cryptocurrency payments, they typically convert these transactions to fiat currency through a third-party payment processor. This practice undermines the potential advantages of using stablecoins, as merchants ultimately receive fiat currency rather than taking direct advantage of digital assets." Mr. Quinlan continued, "Additionally, stablecoins issued by many financial institutions tend to be limited to their own ecosystems, also known as 'walled gardens'."

The report makes the case for a trusted, regulated, non-proprietary stablecoin to achieve wider real-world applications in the payments space. The introduction of a stablecoin has the potential to revolutionize the current domestic payments landscape in Hong Kong, which faces high fees, inflexible user options and slow settlement times for merchants.

"Consistent with Hong Kong's digital economy agenda (articulated in the Policy Address) and the goal of promoting regulated stablecoins, we believe their adoption can accelerate progress in this area." Sean Lee, co-founder and chief strategy officer of IDA, said, "We plan to launch a Hong Kong dollar-based stablecoin product and aggressively expand our network of partners to integrate stablecoins into the existing financial infrastructure, ultimately working to solidify Hong Kong's leadership position in the global digital asset space."

"We believe there is a significant market opportunity for non-USD-pegged stablecoins, as 83% of the world's countries do not use the US dollar as their official or secondary trading currency. This means that residents and tourists primarily use local currencies for transactions." Mr. Lee added, "A Hong Kong dollar-based stablecoin could provide broad utility in a number of areas, including retail and commercial payments, and contribute to an increasingly interconnected global economy."