The two trials will test out letting mainland Chinese residents visiting Hong Kong to 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 mainland Chinese residents to buy stablecoins issued by virtual asset company IDA in Hong Kong.
The first trial will allow for anonymous registration on a regulated stablecoin app and the other will facilitate the purchase of tokenized financial products with the stablecoin.
“With Hong Kong on the cusp of announcing new stablecoin regulations allowing digital currencies on public blockchains, the introduction of this KYC solution trial gives Mainland Chinese residents their first opportunity to legally hold public chain wallets and transact with stablecoins, such as HKDA, a fiat-referenced Hong Kong Dollar stablecoin issued by IDA. This project signals a possible 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 dealing in cryptocurrencies, still the country has been investing heavily in blockchain technology. Despite the popularity of crypto trading, state-backed projects are often more focused on B2B and corporate use cases. Blockchains tend to be permissioned rather than permissionless, and NFT projects — including ones released by local museums — have been warned that their purpose should be for collecting rather than speculation.
The trials in Hong Kong will use the China Real-Name Decentralized Identifier System (RealDID) for anonymous registration. A blockchain-based ID system launched in China in December last year, and it is being run by the Blockchain-based Service Network, which is backed by Red Date Technology, and the Ministry of Public Security’s First Research Institute.
Under Chinese law, users on digital services platforms are required to undergo real-name registration. 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 will be able to access stablecoins and other token-based financial products without needing to submit passports or bank statements.
It does not appear that major stablecoins such as Tether and Circle’s U.S. dollar stablecoins will be available.