Hong Kong tests a new anonymous KYC system, allowing Chinese residents to access stablecoin services while preserving data privacy.
Author: MIT Tech Review
Key Takeaways
- Flare and Red Date Technology tested a decentralized identity system in Hong Kong allowing anonymous stablecoin access.
- The trial used China’s RealDID to verify identities without revealing personal information.
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Flare and Red Date Technology have launched a new trial of a decentralized identity system in Hong Kong, allowing Mainland Chinese visitors to access regulated stablecoin services while preserving data privacy, announced in a press release.
The pilot program will connect users to China’s RealDID platform, allowing anonymous verification that complies with KYC requirements while protecting personal information.
The trials will involve two key applications: the first enables users to register anonymously on a regulated stablecoin app, and the second allows them to purchase tokenized financial products with stablecoins, such as the Hong Kong dollar-pegged HKDA, issued by IDA.
Both trials are designed to maintain compliance with KYC standards while using zero-knowledge (ZK) technology to keep user identities private.
This means Mainland Chinese visitors in Hong Kong will have access to digital financial services without exposing personally identifiable information, once the relevant legislation and systems are fully implemented.
“We are excited to lead the way in bringing decentralized solutions to new markets, particularly China, where the potential is unmatched,” said Hugo Philion, Co-founder and CEO of Flare Labs.
This trial aligns with Hong Kong’s upcoming digital currency regulations, potentially allowing Mainland Chinese visitors to legally transact with stablecoins using RealDID, China’s digital identity platform launched in December 2023.
Once operational, visitors could register wallets and access tokenized products without needing traditional documents like passports or bank statements.
With 50 million Mainland visitors contributing over $10 billion annually to Hong Kong’s economy, the potential market for blockchain-based financial services is substantial.
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