Future Profit Hotspot: Stablecoins Driving the New Frontier of Finance

Dr Frederick Wong
Jun 11
5 min read

Industries with significant potential for high returns in the future include renewable energy, artificial intelligence (AI), financial technology (Fintech), healthcare, logistics, property technology (PropTech), and sustainable products. According to Bloomberg analysis, these industries are gaining attention due to strong demand, technological innovation, and their potential for global development.

Stablecoins—a type of cryptocurrency pegged to fiat currencies (e.g., the US dollar)—are becoming a core tool for payments and cross-border transactions in these industries. Leveraging blockchain technology, stablecoins enable fast, low-cost transactions, making them particularly suitable for cross-border trade and the financial needs of emerging markets. In 2024, global on-chain stablecoin transaction volume reached $27.6 trillion, surpassing Visa ($14.1 trillion) and Mastercard ($9 trillion) combined. Stablecoins' share of cross-border payments rose from 7% in 2023 to 10%, with strong demand in regions with volatile currencies, such as Africa, Latin America, and Southeast Asia.

Regulatory frameworks are accelerating this transformation. Hong Kong’s Stablecoin Ordinance, set to take effect on August 1, 2025, establishes a licensing regime to ensure asset reserves and redemption security, boosting market confidence. Similarly, the EU's Markets in Crypto-Assets Regulation (MiCA) will be fully implemented in January 2025. In Singapore, the Payment Services Act (2024) and the UAE Central Bank’s approval of the dirham-pegged stablecoin AE Coin are encouraging local issuance of stablecoins, further supporting the internationalization of fiat currencies like the Chinese yuan.

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Key Applications Unlocking Value

Stablecoins are reshaping financial operations across industries:

Cross-border payments: By bypassing the slow and costly SWIFT system, stablecoins enable transactions within 2–3 minutes at costs as low as one-thousandth of traditional systems, making them ideal for B2B trade and supply chain finance.
Cash flow optimization: Instant settlements enhance corporate cash flow management, reducing fund idle time.
Smart contract payments: Automating milestone payments and escrow transactions lowers dispute risks and increases transparency.
Financial inclusion: Stablecoins provide financial services to the 1.3 billion unbanked population globally, with approximately 10% expected to gain access by 2024.
Digital service revenue: SaaS and cloud service providers can use stablecoins for instant, low-cost global payments.
Corporate card payments: Integration with Visa cards facilitates global procurement and travel expenses while avoiding exchange rate risks.

Pros and Cons of USD, HKD, and Other Stablecoins

USD Stablecoins (e.g., USDT, USDC)

Advantages:

High global acceptance: USD stablecoins account for 89% of the stablecoin market (total value $2.32 trillion in 2025), with widely used examples such as USDT ($143 billion) and USDC ($58 billion), especially in cross-border payments and decentralized finance (DeFi).
Strong liquidity: Backed by the US dollar's status as a global reserve currency, with abundant trading pairs and deep liquidity.
Regulatory support: The US GENIUS Act (passed on May 19, 2025) provides institutional safeguards, requiring 1:1 reserves and regular audits to enhance market confidence.

Disadvantages:

Geopolitical risks: The dominance of the US dollar faces de-dollarization pressures (e.g., China and Russia reducing US Treasury holdings), which could affect stability.
Centralization risks: If issuers (e.g., Tether) face reserve issues (as seen in the 2022 TerraUSD collapse), it could trigger systemic crises.

HKD Stablecoins (e.g., HKDR)

Advantages:

Localization benefits: As an international financial center, Hong Kong's HKD stablecoins can serve the Greater Bay Area and Belt and Road markets, promoting yuan internationalization.
Clear regulations: Hong Kong's Stablecoin Ordinance requires a HK$25 million capital threshold and 1:1 reserves, offering strong redemption guarantees suitable for small and medium-sized enterprises.
Cost efficiency: Designed for cross-border payment needs in Asia, offering low fees and fast settlements.

Disadvantages:

Limited market size: Compared to USD stablecoins, HKD stablecoins have weaker liquidity and lower international acceptance.
Competitive pressure: They must compete with USD and EUR stablecoins, which may compress market share.

Other Stablecoins (e.g., EURC, AE Coin)

Advantages:

Regional suitability: Euro-pegged stablecoins (e.g., EURC) are growing rapidly in European DeFi scenarios, while the UAE’s AE Coin integrates with local banking systems, offering regional advantages.
Diversification options: Reduces reliance on a single currency, meeting multi-currency transaction needs.

Disadvantages:

Inconsistent regulations: Regulatory standards vary significantly across regions (e.g., Singapore and UAE frameworks are not yet fully unified), which may hinder cross-border applications.
Liquidity challenges: Compared to USD stablecoins, they have lower market acceptance and transaction volumes.

Potential Use of Stablecoins for Money Laundering

Due to their anonymity, cross-border mobility, and low regulatory thresholds, stablecoins theoretically present potential risks for money laundering. However, as regulations tighten, this risk is being increasingly mitigated.

Risk factors:

Anonymity loopholes: Early stablecoin transactions (e.g., USDT) lacked mandatory KYC/AML (Know Your Customer/Anti-Money Laundering) requirements, making them susceptible to hiding illicit funds. The 2022 FTX bankruptcy revealed links between some stablecoins and money laundering activities.
Cross-border opacity: Stablecoins allow cross-border transfers without intermediaries, making them harder to trace, especially in regions with weak regulations (e.g., parts of Africa).
DeFi applications: Decentralized finance platforms may serve as laundering channels due to the lack of centralized oversight, with stablecoins easily used to obscure fund origins.

Risk mitigation measures:

Enhanced regulation: The US GENIUS Act and Hong Kong’s Stablecoin Ordinance require issuers to comply with anti-money laundering regulations and undergo regular audits, reducing the space for anonymous transactions. On June 9, 2025, the Hong Kong Monetary Authority emphasized the implementation of strict KYC/AML regulations.
Blockchain transparency: Stablecoin transaction records are stored on-chain and theoretically traceable. Combined with international cooperation (e.g., FATF standards), this can effectively identify suspicious activities.
Empirical data: According to Chainalysis’ 2024 report, stablecoin-related money laundering activities accounted for only 0.12% of total transaction volume, down from 0.34% in 2021, demonstrating the effectiveness of regulatory measures.

Conclusion: While stablecoins have been used for money laundering and the potential risks persist, the likelihood of illegal use has significantly declined with the improvement of global regulatory frameworks (e.g., MiCA, Hong Kong ordinances). Companies adopting compliant stablecoins (e.g., USDC, HKDR) can mitigate risks.

Risk Factor Analysis

Although stablecoins hold great potential, the associated risks cannot be ignored:

Reserve and redemption risks: If issuers fail to maintain 1:1 reserves (e.g., the 2022 TerraUSD collapse causing $60 billion in losses), it could trigger a run and impact the broader financial system.
Regulatory uncertainty: Diverging global regulatory frameworks (e.g., differing standards between the US and EU) may lead to higher compliance costs or market confusion.
Technical risks: Blockchain networks (e.g., Ethereum) may experience congestion or security vulnerabilities (e.g., smart contract flaws), resulting in transaction failures or fund losses.
Market volatility transmission: Stablecoins are highly correlated with the crypto market. If assets like Bitcoin crash, it may indirectly affect confidence in stablecoins.
Geopolitical impacts: USD stablecoins may face usage restrictions due to trade wars or sanctions, while other stablecoins could be affected by local monetary policy fluctuations.
Money laundering risks: Despite stricter regulations, stablecoins may still be exploited by criminals, necessitating stronger internal compliance reviews by companies.

Strategic Implications

The rise of stablecoins aligns with the digital financial revolution. Hong Kong’s Stablecoin Ordinance and the US GENIUS Act reflect efforts to strengthen monetary dominance—especially the US dollar, which underpins 89% of the stablecoin market. Bloomberg data suggests that following the passage of the GENIUS Act, stablecoin supply could grow tenfold within four years, potentially accounting for 10% of the foreign exchange spot market, supporting US debt demand and easing fiscal pressures.

For businesses, adopting stablecoins offers cost efficiency, liquidity, and market expansion advantages. However, companies must carefully assess the global dominance risks of USD stablecoins, the regional limitations of HKD stablecoins, and the regulatory challenges of other stablecoins. By employing diversification strategies, choosing compliant stablecoins, and strengthening risk management, businesses can thrive in an increasingly interconnected economy while addressing potential financial, technological, and compliance risks.

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