The two trials will test whether mainland Chinese residents visiting Hong Kong can access tokenized financial services through a local app.
It will use the China Real-Name Decentralized Identifier System (RealDID) for anonymous registration.
Layer one blockchain Flare and decentralized cloud infrastructure company Red Date Technology have announced two trials that will allow Chinese mainland residents to purchase stablecoins issued by Hong Kong virtual asset company IDA.
The first trial will enable anonymous registration on a regulated stablecoin app and the other will facilitate the purchase of tokenized financial products with the stablecoin.
“With Hong Kong set to announce new stablecoin regulations allowing digital currencies on public blockchains, the introduction of this KYC solution trial gives Mainland Chinese residents their first chance to legally hold public on-chain wallets and transact with stablecoins, such as HKDA, a fiat reference to Hong Kong Dollar stablecoin issued by IDA. This project marks a potential first step in aligning with China’s long-term approach to integrating blockchain technology,” the companies said in a statement.
China has a strict stance on residents trading in cryptocurrencies, yet the country has invested heavily in blockchain technology. Despite the popularity of crypto trading, state-backed projects are often more focused on B2B and enterprise applications. Blockchains tend to grant permission rather than consent, and NFT projects – including those released by local museums – have been warned that their purpose should be collection rather than speculation.
The Hong Kong trials use the China Real-Name Decentralized Identifier System (RealDID) for anonymous registration. A blockchain-based ID system launched in China last December and operated by the Blockchain-based Service Network, which is supported by Red Date Technology, and the First Research Institute of the Ministry of Public Security.
Under Chinese law, users on digital service platforms are required to register under their real names. But by using RealDID, they can remain anonymous to companies and platforms while still meeting real name compliance requirements under Chinese law. In Hong Kong, they can access stablecoins and other token-based financial products without having to submit passports or bank statements.
It does not appear that major stablecoins such as the US dollar stablecoins of Tether and Circle will be available.