Hi {{first_name}} , it's Marc.
Welcome to the Monday edition of the 51 Insights digital asset newsletter.
Stablecoins were built to get money out of banks. On Friday, HSBC launched one that never leaves.
Here's what matters this week:
Let’s unpack. 👇
New on the podcast
Jeff Booth: Money Is Theft and the Debt Can't Be Repaid. The author of The Price of Tomorrow on why $365 trillion of global debt can never be repaid, and why AI makes it worse: “the faster productivity gains happen, the faster that debt can't be repaid.”
THE BIG STORY / DIGITAL CASH
The stablecoin that never leaves the bank
What's going on here?
HSBC launched RedCoin, its first stablecoin, on Friday. Over 3.3 million users of PayMe, its payments app, can switch on a wallet in the coming days and pay friends or 100,000+ merchants. Later this year, RedCoin can buy a new share class of HSBC's own Hong Kong dollar money market fund. HSBC's daily disclosure shows about HK$81 million in circulation, roughly $10 million.
What does this mean?
Read the terms. RedCoin runs on a permissioned blockchain, and HSBC holds the private key to the wallet where everyone's coins sit. You can't send it to an exchange, or even from PayMe to HSBC's banking app. It pays no interest, it isn't covered by deposit insurance, and the income on its reserves goes to HSBC.
Hong Kong makes that easy. Its stablecoin law bars licensed issuers from paying interest “or interest-like incentive in any form.” In the US, SoFi pays 4.40% to keep crypto cash as a deposit. In Hong Kong, no coin can outbid HSBC, so the race is distribution. HSBC started with 3.3 million users.
Why should I care?
My read: bank stablecoins are built like deposit tokens, to keep money in the bank. JPM Coin moves only between vetted clients; RedCoin only inside HSBC's apps. The business is the last step: a coin that buys HSBC's own fund. HSBC owns the coin, the wallet, the chain and the fund. If you run a bank, that's the template.
Related Pro story: Big banks talk down stablecoins, then co-own one
Since Friday
Friday · Canada closes the rewards door. Canada's draft stablecoin rules bar issuers from paying yield, including through exchanges and other partners. The OCC's final rule last week went the other way. Comments close December 23.
Monday · Hong Kong's funds trade 24/7. The SFC approved the first secondary trading of tokenized public funds: two ChinaAMC money market funds now trade around the clock on a licensed crypto platform. RedCoin can't reach it.
Friday · More companies veto their tokens. Wells Fargo, Arm and Intuit are among six more that objected to OKXICE trading tokens of their shares, Reuters reports. That makes 22.
The week ahead
Thursday, October 29 · Coinbase and Mastercard report. So do ICE and Strategy. Listen for USDC rewards at Coinbase and stablecoin settlement at Mastercard. Also: the ECB, US GDP and PCE, and Unichain's move to OP Enterprise.
Friday, October 30 · Deadlines in Brazil and Australia. Crypto firms in Brazil must apply for central bank authorization, and the RBA's tokenized settlement consultation closes. The Bank of Japan decides; Cboe reports.
Sunday, November 1 · Canada's bank crypto rules start. OSFI's crypto capital guideline applies to banks with an October 31 year-end.
Monday, November 2 · Hong Kong FinTech Week opens. HSBC's Georges Elhedery is on the speaker list. Treasury publishes its borrowing estimates.
This week · Samsung Wallet adds USDC. Samsung promised it for the last week of October. Not live as of Monday.
👉Follow all the stories on 51insights.xyz
One useful read
The ledger problem · FT. Brendan Greeley argues a token changes the record, not who you have to trust. Read it next to RedCoin: a new ledger, still HSBC's. Paywalled.
My question for the week: if a stablecoin can't leave the bank's app, how is it different from a deposit without the insurance?
That’s all for now, folks.
Take care
– Marc & Team
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