HSBC RedCoin stablecoin goes live for 3.3 million PayMe users

The HSBC RedCoin stablecoin went live on Friday, Oct. 23, giving the bank's first stablecoin a large retail audience from day one. RedCoin, ticker RCHKD, is pegged to the Hong Kong dollar and is being switched on in stages for more than 3.3 million users of the PayMe app, the bank said.

What happened

Users will be able to activate a wallet inside PayMe over the coming days and use it to send money to friends or pay at more than 100,000 merchants. There is no minimum balance and no separate account to open, PayMe head Lawrence Li told reporters, according to the South China Morning Post. "The key priority in the first phase is ensuring stable service," he said.

The token is licensed and regulated by the Hong Kong Monetary Authority, which granted HSBC a stablecoin issuer licence in April. Reserves will consist entirely of high-quality liquid assets kept in segregated accounts, HSBC has said, according to CoinDesk, and the bank's own digital assets custody unit safeguards the reserves.

Before launch, the bank ran staff pilots with nearly 100 users covering the full journey from minting to live transfers. Launch offers include PayMe transaction discounts and RewardCash points.

Why it matters

Distribution is the point. Most stablecoins reach users through exchanges or crypto wallets. RedCoin sits inside an app that people already use for daily payments, which removes the need for a new account, said Vincent Chok, chief executive of FDUSD issuer First Digital, in comments to CoinDesk.

HSBC is not first in the city. Anchorpoint Financial, a Standard Chartered-led venture, received a licence at the same time and started a limited launch of its HKDAP token in August aimed at institutional payments, CoinDesk said. The HSBC RedCoin stablecoin is the first of the two aimed squarely at retail users.

It also builds on HSBC's existing digital asset lineup in the city: digital bonds for institutions through HSBC Orion, an HSBC Gold Token for retail customers and a tokenised deposit service for wholesale payments. The bank has taken part in the HKMA's e-HKD+ pilot and Project Ensemble since 2022, according to its announcement.

Banks elsewhere are moving in the same direction, as we saw with Japan's megabank yen stablecoin pilot and the U.S. OCC's final GENIUS Act rule.

What's next

Later this year, HSBC plans to add RedCoin wallets to its Hong Kong mobile banking app and let customers buy tokenized investment products with the token, starting with a new share class of its Hong Kong dollar money market fund, according to the HSBC announcement.

"This is only the beginning. We will soon add more products, including expanding into wholesale corporate and institutional use cases," said John O'Neill, HSBC's managing director for digital assets and currencies. In an HSBC survey of 1,060 customers in June, 53% said Hong Kong dollar stablecoins could strengthen the city's competitiveness.

The test for the HSBC RedCoin stablecoin will be uptake once launch promotions end and whether merchants see any cost advantage over existing PayMe transfers.