HKMA official says blockchain use cases need more work as it readies new stablecoin consultation paper

Blockchain technology has a “powerful” value proposition but there are a “large spectrum of issues” involved in current use cases, according to a senior Hong Kong Monetary Authority (HKMA) official who was speaking at a digital summit in the city.

The comments come as the city’s de facto central bank prepares a new consultation paper on the regulation of stablecoins amid Hong Kong’s push to be a Web3 hub.

The underlying technology for virtual assets has the potential to benefit the real economy and everyone in society, HKMA executive director Clara Chan said on Friday at the Digital Economy Summit 2023. But blockchain use cases are “still in the throes of creation” where many issues need to be resolved before they can scale up to reach mass adoption and operate in a sustainable manner, she said.

The problems span “user journey, governance, accounting and reporting, data privacy and security”, according to Chan, who added that people should also be cautious that many use cases “may not involve intrinsic value”, and could therefore be subject to extreme price and valuation volatility.

“It’s very important to distinguish between the underlying technology and different use cases,” Chan said.