In late May 2025, ZhongAn Online (06060.HK) emerged as a standout performer in the stock market. On May 29 alone, its share price skyrocketed by 31.56%. Over just five trading days—from May 22 to May 29—the cumulative gain exceeded 74%, with nearly a 100% increase over the past month.
What triggered this sudden surge in investor interest?
The answer lies in one of the most talked-about innovations in digital finance today: stablecoins.
While ZhongAn Online itself does not directly issue stablecoins, it holds a 43.43% stake in ZA Bank (ZhongAn Virtual Bank), Hong Kong’s first digital bank to provide reserve banking services for stablecoin issuers. This strategic positioning placed ZhongAn at the heart of a rapidly evolving financial trend—just as Hong Kong made global headlines by becoming the first jurisdiction to establish a comprehensive regulatory framework for fiat-backed stablecoins.
Hong Kong’s Landmark Move: The Stablecoin Regulation Breakthrough
On May 21, 2025, the Hong Kong Special Administrative Region Legislative Council passed the Stablecoin Ordinance Draft, marking a pivotal moment in global financial regulation. This legislation positions Hong Kong as the world’s first jurisdiction with a full-chain regulatory system for lawful, fiat-collateralized stablecoins.
The move has ignited investor enthusiasm and drawn major tech and financial players into the ecosystem. The Hong Kong Monetary Authority (HKMA) has already unveiled its first cohort of stablecoin issuers in its regulatory sandbox. Among them are JDBlockchain Tech (Hong Kong), a subsidiary of JD Group, and Circle Innovation Technology.
Notably, ZA Bank indirectly owns 8.7% of Circle Innovation through ZhongAn Digital Asset Group—further strengthening its role in the emerging stablecoin infrastructure.
As capital flooded into stablecoin-related stocks, ZhongAn became the go-to proxy for investors seeking exposure to this transformative trend, leading to intense speculative trading and a sharp run-up in its share price.
What Exactly Is a Stablecoin?
Despite being part of the broader cryptocurrency conversation, stablecoins are fundamentally different from volatile digital assets like Bitcoin or Ethereum.
A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to real-world assets, such as the U.S. dollar, Hong Kong dollar, or other fiat currencies. Some are even backed by short-term government securities or cash deposits.
For example, USDT (Tether) is pegged 1:1 to the U.S. dollar. Every USDT token in circulation is theoretically backed by one dollar held in reserve. This makes it ideal for use in digital transactions where price volatility must be avoided.
This stability unlocks practical applications across cross-border payments, remittances, e-commerce, and financial services—areas where traditional systems are often slow, expensive, and fragmented.
Real-World Impact: How Stablecoins Transform User Experience
Consider a shopper based in Hong Kong who frequently buys products on JD Global’s Hong Kong/Macau site.
Under traditional payment methods, completing a purchase involves multiple intermediaries—banks, payment processors, clearinghouses—leading to high fees and confirmation delays that can stretch up to 48 hours. System outages or maintenance can further delay order fulfillment.
With a JD-issued stablecoin, the experience changes dramatically:
- The user links a compatible digital wallet to their JD account.
- At checkout, they select the stablecoin (e.g., pegged 1:1 to HKD or USD).
- Thanks to blockchain’s decentralized network, the transaction is verified and settled within seconds, bypassing traditional gatekeepers.
- There’s no exchange rate risk, minimal fees, and instant order confirmation.
This isn’t theoretical—it’s the future of frictionless commerce.
Beyond Payments: Stablecoins in Insurance and Financial Services
ZhongAn Online isn’t just riding a market wave; it’s well-positioned to lead innovation. Backed by giants like Ant Group, Ping An, and Tencent, ZhongAn has long been recognized for its tech-driven approach to insurance and financial services.
In Hong Kong, ZA Bank has become a pioneer in Web3 banking:
- First digital bank to offer stablecoin reserve custody services
- Provides core banking solutions for Web3 enterprises
- Offers clearing and settlement for licensed virtual asset trading platforms (VATPs)
- Asia’s first licensed bank to allow retail customers to trade cryptocurrencies
But the potential goes even further—into industries like insurance.
Imagine you’re a mainland Chinese resident who purchased a cross-border health insurance policy covering private hospitals in Southeast Asia. You fall ill during a trip to Thailand and need urgent care.
Under current processes:
- You pay out of pocket.
- Submit paper receipts and medical reports.
- Wait days—or weeks—for claims processing.
- Receive reimbursement via international wire transfer, involving currency conversion and fees.
Now imagine an upgraded system using a HKD-backed stablecoin issued by the insurer (let’s call it “XXU1”):
- Once your claim is approved, the insurer instantly sends XXU1 tokens to your digital wallet.
- Funds arrive in minutes, with zero transaction fees.
- You can either convert XXU1 to local currency or spend it directly at partner pharmacies, clinics, or online platforms.
This transforms insurance from a bureaucratic burden into a seamless, real-time service—enhancing customer trust and operational efficiency.
👉 See how blockchain is revolutionizing financial inclusion and transaction speed worldwide.
Risks and Regulatory Challenges
Despite their promise, stablecoins are not without risks:
- Reserve transparency: Are issuers truly holding sufficient backing for every coin?
- Operational security: Blockchain systems can be vulnerable to exploits or smart contract bugs.
- Regulatory divergence: While Hong Kong moves forward with clear rules, other jurisdictions remain cautious or restrictive.
However, under the “One Country, Two Systems” framework, Hong Kong enjoys a unique advantage: an internationally integrated financial system with strong legal foundations—making it an ideal testing ground for new financial technologies.
The Bigger Picture: A $2 Trillion Opportunity
Today, the global stablecoin market—dominated by USD-backed tokens—is valued at around $250 billion. But projections suggest explosive growth ahead.
According to a recent report by Standard Chartered, stablecoin issuance could reach $2 trillion by 2028, driven by rising demand for fast, low-cost cross-border transactions and institutional adoption.
If realized, this shift could:
- Reshape global trade settlement systems
- Reduce reliance on traditional correspondent banking
- Empower underserved populations with access to digital financial tools
- Redefine monetary sovereignty in a decentralized world
Frequently Asked Questions (FAQ)
Q: Is ZhongAn Online directly issuing stablecoins?
A: No. ZhongAn does not issue stablecoins directly. However, its subsidiary ZA Bank provides reserve banking services for licensed issuers, giving ZhongAn indirect exposure to the ecosystem.
Q: How do stablecoins maintain their value?
A: Most stablecoins are backed 1:1 by reserves of fiat currency (like USD or HKD) held in regulated financial institutions. Regular audits help ensure transparency and solvency.
Q: Are stablecoins safe for everyday use?
A: When issued by reputable entities under strict regulation—as in Hong Kong’s new framework—they can be highly secure. However, users should always verify issuer credibility and reserve disclosures.
Q: Can stablecoins replace traditional money?
A: Not entirely—but they can complement it. Stablecoins excel in digital environments, especially for cross-border payments, remittances, and DeFi applications.
Q: Why is Hong Kong leading in stablecoin regulation?
A: Its status as a global financial hub, combined with supportive government policies and advanced fintech infrastructure, makes Hong Kong uniquely positioned to innovate while maintaining regulatory rigor.
Q: Could stablecoins be used in insurance payouts?
A: Absolutely. As shown in the Thailand medical scenario, stablecoins enable near-instant claims settlement, reducing friction and improving customer experience.
The rise of stablecoins represents more than just a technological upgrade—it signals a fundamental shift in how value moves across borders and industries.
With companies like ZhongAn at the forefront and regulators like Hong Kong paving the way, we may be witnessing the early stages of a digital financial revolution.
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