HSBC launched RedCoin (HSBC RedCoin, or RCHKD), a stablecoin pegged to the Hong Kong dollar, in its PayMe payment app on October 23. The product was launched after HSBC received a stablecoin issuer licence from the Hong Kong Monetary Authority (HKMA).
HSBC said it will gradually make an in-app RedCoin wallet available to more than 3.3 million existing PayMe users. Users can convert their Hong Kong dollar balance in PayMe into RedCoin at a one-to-one rate, send it to contacts, or use it to pay at more than 100,000 PayMe merchants. If a recipient prefers fiat currency, HSBC converts the RedCoin into the payment currency, such as Hong Kong dollars, before making the payment.
RedCoin is issued on HSBC’s proprietary blockchain, and HSBC holds customers’ coins in custody. The bank said the full amount in circulation is backed by segregated, high-quality and highly liquid reserve assets and can be redeemed one-to-one for Hong Kong dollars in accordance with the terms. Unlike a bank deposit, RedCoin does not earn interest and is not protected by Hong Kong’s Deposit Protection Scheme. According to the white paper, there are currently no fees for purchase, redemption, transfer, or merchant payments, although the fees may change after notice is given.
HSBC plans to add a RedCoin wallet to its Hong Kong mobile banking app by the end of the year. It also plans to allow customers to use RedCoin to subscribe to investment products, including tokenized interests in its Hong Kong dollar money market fund. Transfers of RedCoin between the wallets in the two apps are not currently supported.