The capital market's enthusiasm for stablecoins continues to surge. On July 3, market rumors indicated that Hong Kong-listed company Dmall (02586.HK) was preparing to apply for a stablecoin license in Hong Kong, instantly igniting market sentiment. Its stock price skyrocketed, with intraday gains reaching nearly 90% before paring to close around 23% up, valuing the company at HKD 10 billion.
In an after-market announcement on July 3, Dmall confirmed it was indeed preparing to apply for a stablecoin license and had purchased Bitcoin through the public market, HashKey Exchange.
That same day, stablecoin-related concept stocks in both A-share and H-share markets experienced a wave of increased activity. Victory Securities (08540.HK) and Guotai Junan International (01788.HK) saw gains exceeding 10%. In the A-share market, several companies, including Jinyi Culture (002721.SZ), which hit the daily limit-up, and Jingbeifang (002987.SZ), which rose nearly 8%, were notable performers. Other stocks like Hengbao Co., Ltd. (002104.SZ) and Chutian Dragon (003040.SZ) also climbed over 4%.
Shen Miao, an analyst at Chanson & Co., noted that while Hong Kong has announced its regulatory framework for stablecoins, formal operations are still some time away. The current market activity is largely driven by speculative anticipation of this concept. Investors are advised to carefully choose their timing.
Dmall's Stablecoin Ambitions and Stock Volatility
Another Hong Kong-listed company is making a move into stablecoins. According to media reports, Dmall is preparing to apply for a stablecoin license in Hong Kong. Tang Yifan, Vice President and Chief Financial Officer of Dmall, stated the company is bullish on the cryptocurrency sector long-term. It has already allocated Bitcoin to its treasury and is recruiting Web3 talent to advance its strategy.
He pointed out that stablecoins could significantly enhance cross-border payment efficiency for its retail clients, reduce costs, and improve the consumer experience, aligning with the global trend of increasing cryptocurrency adoption in commerce.
Public information shows Dmall was established in 2015 and is a leading provider of retail digitalization solutions in China and Asia. It offers a wide range of products and services designed to enhance and digitize the operations of local retailers. The company listed on the main board of the Hong Kong Stock Exchange in December 2024.
Driven by this news, Dmall's stock price surged, with intraday gains approaching 90% before retreating. At the close, Dmall was trading at HKD 11.14, up 23.64%. The day's turnover reached HKD 1.877 billion, with a turnover rate of 16.48%.
A stablecoin is a type of cryptocurrency based on blockchain technology. It maintains relative price stability by being pegged to fiat currencies, commodities, other major crypto assets, or through algorithmic mechanisms that regulate its supply.
In May of this year, the Legislative Council of the Hong Kong Special Administrative Region passed the Stablecoin Ordinance Bill, establishing the first comprehensive regulatory framework for stablecoin issuance. This ordinance will take effect on August 1, after which the Hong Kong Monetary Authority (HKMA) will begin accepting license applications. The HKMA has already initiated market consultations on implementing the specific guidelines for the Stablecoin Ordinance, aiming to establish them promptly.
Furthermore, on June 26, the Financial Services and the Treasury Bureau released the Hong Kong Policy Declaration on Virtual Assets Development 2.0. This document covers aspects such as optimizing regulation, expanding product offerings, advancing application scenarios, and fostering talent and cooperation.
Research from China Securities Co. suggests this declaration marks Hong Kong's transition from a "pilot phase" to an "implementation and advancement phase" for its digital asset market. The policy vision has expanded from virtual assets, represented by cryptocurrencies, to the broader tokenization of real-world assets. This shift is expected to accelerate the vigorous development of new digital asset formats like stablecoins and Real-World Assets (RWA).
Indeed, stablecoins have recently acted as a catalyst for sharp increases in the stock prices of several companies.
According to an announcement from Guotai Junan International, the company received approval from the Hong Kong Securities and Futures Commission (SFC) on June 24 to upgrade its existing securities trading license to a comprehensive license allowing it to provide virtual asset trading and advisory services. Following this upgrade, its clients can directly trade virtual assets like cryptocurrencies (e.g., Bitcoin, Ethereum) and stablecoins (e.g., Tether) on the Guotai Junan International platform.
On June 25, Guotai Junan International's stock price surged 198.39%. It reached an intraday high of HKD 7.02 on June 26, a record since its listing. As of July 3, its year-to-date gain had expanded to 250.97%.
A-Share Concept Stocks: Mixed Fortunes Amid Speculation
Amid the continuous stream of favorable stablecoin policies, related concept stocks in the A-share market, such as those in the digital currency and stablecoin sectors, have also garnered significant attention. This has led to several popular outperformers, including Shenzhen Forms Syntron Information Co., Ltd. (300468.SZ), Hengbao Co., Ltd., and Jingbeifang.
On July 3, Jingbeifang opened strong, rising over 6% in the morning session. Its price hit the daily limit-up in the afternoon but failed to maintain it, closing at CNY 21.18, a gain of 7.90%.
According to an investor relations activity record released by Jingbeifang on June 23, the company received surveys from 96 institutional investors between June 22 and 23, with discussions centered on stablecoins.
Jingbeifang stated that the company continues to focus deeply on the fintech industry and is deeply involved in building the digital RMB ecosystem. The construction of a stablecoin ecosystem is similar to that of the domestic digital RMB system, involving layers for issuance, operation, and application. The technology and product experience accumulated by the company in the construction and application promotion of the digital RMB system are highly reusable.
The company also expressed an open attitude, engaging in extensive and in-depth communication with various clients and partners to explore stablecoin business opportunities. This includes in-depth discussions with core clients, such as large state-owned banks, about stablecoin development trends and potential business opportunities, as well as exploring diverse cooperation opportunities with other types of clients.
Besides Jingbeifang, Jinyi Culture hit the daily limit-up on July 3, and Hengbao Co., Ltd. rose over 5%. Chutian Dragon opened lower, with losses exceeding 7% at one point in the morning, but it rapidly recovered in the afternoon to close up 4.75%.
However, among the various stablecoin concept stocks, some have already shown divergence and experienced significant pullbacks.
Since late May, the share price of Guangzhou Yuyan Computer Co., Ltd. (002177.SZ) had been rising continuously, even recording a streak of five consecutive limit-up sessions. As of July 3, Yuyan's year-to-date gain stood at 65.15%. However, on that day, it closed at CNY 7.43, down 9.83%, after hitting the daily limit-down during the session. The full-day turnover was CNY 2.516 billion, with a turnover rate of 50.30%.
It is worth noting that Yuyan has repeatedly clarified that it is not involved in stablecoin or digital currency-related business. On June 6, the company stated on the Shenzhen Stock Exchange's interactive platform that it is primarily engaged in the operation of its own property industrial parks and related operational services in the intelligent financial equipment industry, and does not involve stablecoins.
Data from the Dragon and Tiger List (a daily list of top traders) for July 3 showed that the top five buyers of Yuyan shares purchased a combined CNY 149 million, while the top five sellers offloaded a combined CNY 263 million. Specifically, the first to fourth top buying seats were all associated with individual investor groups, collectively buying CNY 122 million worth of shares. The top five selling seats included institutional专用 (special) seats and branches of major securities firms.
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Frequently Asked Questions
What is a stablecoin?
A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset like a fiat currency (e.g., USD), a commodity (e.g., gold), or through algorithmic mechanisms controlling its supply. This contrasts with the high volatility seen in cryptocurrencies like Bitcoin.
Why is Hong Kong's stablecoin regulation significant?
Hong Kong's establishment of a clear regulatory framework for stablecoins, through the Stablecoin Ordinance, provides legal clarity and legitimacy for issuers and operators. This is expected to attract businesses, foster innovation in the digital asset space, and enhance consumer protection, positioning Hong Kong as a hub for virtual asset development.
How are companies leveraging stablecoin news?
Some companies are actively exploring genuine business opportunities in the stablecoin ecosystem, such as applying for licenses or developing related technologies. However, others may see their stock prices rise due to market speculation and being categorized as "concept stocks," even if they have no concrete plans or operations in the sector, leading to potential volatility.
What should investors consider with stablecoin concept stocks?
Investors should carefully distinguish between companies with tangible plans and those merely benefiting from speculative hype. It's crucial to conduct thorough research, understand the company's actual business model and announcements, and be aware of the risks associated with high volatility and the early stage of stablecoin regulation and adoption.
What is the difference between stablecoins and digital Yuan?
The digital Yuan (e-CNY) is a central bank digital currency (CBDC) issued by the People's Bank of China. It is a digital form of the sovereign currency, the Renminbi. Stablecoins, meanwhile, are typically issued by private entities and are pegged to existing assets to maintain stability. They operate on different governance and technological frameworks.
How does stablecoin adoption affect traditional retail?
Stablecoins can potentially revolutionize retail by enabling faster, cheaper, and more efficient cross-border payments. This can reduce transaction costs for businesses and consumers, improve settlement times, and open up new markets for e-commerce, enhancing the overall customer experience in global commerce.