The upcoming trials will test the feasibility of allowing mainland Chinese residents visiting Hong Kong to access tokenized financial services through a local app.
An interesting aspect of these trials is the use of the China Real-Name Decentralized Identifier System (RealDID) for anonymous registration.
Both Layer one blockchain Flare and decentralized cloud infrastructure company Red Date Technology have collaborated to announce two trials that will enable mainland Chinese residents to purchase stablecoins issued by virtual asset company IDA in Hong Kong.
The first trial will focus on anonymous registration on a regulated stablecoin app, while the second trial will facilitate the purchase of tokenized financial products using the stablecoin.
“With Hong Kong poised to introduce new stablecoin regulations permitting digital currencies on public blockchains, the initiation of this KYC solution trial offers Mainland Chinese residents the opportunity to legally possess public chain wallets and engage in transactions with stablecoins like HKDA, a fiat-referenced Hong Kong Dollar stablecoin issued by IDA. This initiative could potentially align with China’s strategic vision of integrating blockchain technology,” the companies stated.
While China maintains strict regulations on cryptocurrency activities, the country has shown significant interest in blockchain technology. Despite the prevalence of crypto trading, government-supported projects typically prioritize B2B and corporate applications. Blockchains are often permissioned rather than permissionless, and NFT projects, even those launched by local museums, are advised to focus on collecting rather than speculation.
The trials in Hong Kong will leverage the China Real-Name Decentralized Identifier System (RealDID) for anonymous registration. This blockchain-based ID system, introduced in China last December, is overseen by the Blockchain-based Service Network, supported by Red Date Technology and the Ministry of Public Security’s First Research Institute.
According to Chinese regulations, users on digital platforms must undergo real-name registration. However, the use of RealDID allows individuals to maintain anonymity from companies and platforms while complying with Chinese real-name requirements. In Hong Kong, residents will have access to stablecoins and other token-based financial products without the need for passport or bank statement submissions.
It is worth noting that major stablecoins like Tether and Circle’s U.S. dollar stablecoins are not expected to be available in these trials.
