Hong Kong lawmaker needs to show CBDC into stablecoin that includes DeFi

Hong Kong authorities are on the lookout for new designs for a central bank digital currency (CBDC), now proposing to problem a CBDC within the type of a stablecoin backed by the federal government.

Wu Jiezhuang, a member of the Legislative Council of the Hong Kong Particular Administrative Area, believes that turning the Hong Kong digital greenback (e-HKD) right into a stablecoin would offer advantages for the adoption of latest applied sciences like Web3.

The choice of growing e-HKD right into a stablecoin has the potential to handle the dangers related to digital belongings in Web3 successfully, Wu Jiezhuang said in an interview with China Blockchain Information on Jan. 5. In line with the lawmaker, such a design of the Hong Kong digital greenback would assist authorities acquire buyers’ belief within the Web3 business and higher defend customers from points like hacks.

“The stablecoins which are presently accessible available in the market are all issued by some personal firms and should not topic to authorities supervision,” Wu Jiezhuang stated, referring to failures of several stablecoin projects in 2022, which brought on a domino impact on the crypto market.

A photograph of Wu Jiezhuang. Supply: The Restricted Instances

The lawmaker additionally identified that the stablecoin could possibly be related to decentralized finance (DeFi) for higher entry in Web3 ecosystems, stating:

“The Hong Kong authorities can take into account whether or not the issuance of digital Hong Kong {dollars} might be related with decentralized finance and turn out to be an vital infrastructure element of the digital asset buying and selling platform.”

Other than his position as a Hong Kong Legislative Council member, Wu Jiezhuang can be a founding member of G-Rocket, a startup accelerator that aims to attract 1,000 Web3 businesses to arrange store within the city-state over the subsequent three years. He co-founded G-Rocket with Hong Kong legislative council member Jonny Ng Package-Chong in 2016.

Associated: How crypto could be good for CBDC and vice versa: Industry exec explains

Wu Jiezhuang is the newest authorities official to focus on the potential advantages of the mixture of CBDC and DeFi. Thomas Moser, a governing board member on the Swiss Nationwide Financial institution, stated in September 2022 {that a} CBDC could provide more stability to DeFi and scale back the dangers of its improvement.

Beforehand, Mikkel Morch, government director on the digital asset hedge fund ARK36, instructed {that a} CBDC doesn’t must be a competitor to a personal or decentralized cryptocurrency. On the similar time, a CBDC could potentially diminish the role of private stablecoins, he famous.