HSBC launches RedCoin, its HKD stablecoin, for 3.3M PayMe users

HSBC has launched HSBC RedCoin (ticker RCHKD), its first stablecoin, on its PayMe app in Hong Kong, the bank announced on Friday. The token is pegged to the Hong Kong dollar and licensed by the Hong Kong Monetary Authority (HKMA). Here is what you need to know.

It is a licensed Hong Kong dollar token

RedCoin is denominated in HKD and regulated under Hong Kong's Stablecoins Ordinance, which sets strict financial-crime controls for issuers. HSBC is one of the three commercial banks that issue Hong Kong's banknotes, and its own HSBC Digital Assets Custody unit safeguards the reserves behind the coin. New to the idea? Read what a stablecoin is.

3.3 million people can use it from day one

The rollout is phased. Over the coming days, more than 3.3 million PayMe users can activate a stablecoin wallet inside the app. According to the South China Morning Post, there is no minimum balance and no extra account to open, and the screens look much like the existing PayMe app.

Two uses at launch: friends and shops

• Person-to-person: send RedCoin instantly to friends and family through PayMe.
• Person-to-merchant: pay with it at more than 100,000 merchants that accept PayMe.

HSBC tested the full journey, from minting to wallet activation and live transfers, in a staff pilot with nearly 100 users.

Investing comes next

Later this year HSBC plans to add the stablecoin wallet to the HSBC HK Mobile Banking App and let customers use RedCoin to buy tokenised investment products, starting with a new share class of its long-running HKD money market fund. John O'Neill, HSBC's head of digital assets and currencies, said corporate and institutional uses would follow.

Part of a wider bank push into tokens

RedCoin builds on HSBC's tokenised deposits for companies, its gold token for retail clients and digital bonds on its Orion platform. It also follows the bank's move to 24/7 swaps with Ripple Prime, and comes a day after US lender SoFi launched an interest-paying tokenized deposit, SOFIE. In HSBC's own survey, 53% of respondents said HKD stablecoins could make Hong Kong more competitive through round-the-clock payments.