Quinlan & Associates

How many of you instinctively think "scam!" when hearing about the latest Web3 development? This reaction underscores a general suspicion around Web3, driven in a large part by its resistance to regulation. While Web3 promotes censorship resistance, it also creates an environment where malicious activities can take place. Consequently, policymakers worldwide are moving to regulate this space, particularly regarding stablecoins – the de facto currency of Web3 ecosystems. In our latest report with IDA, we discuss how these regulations can enhance financial stability and transparency for stablecoin issuers while potentially destabilising incumbents. STABLECOIN REGULATION TRENDS Jurisdictions like the EU, Japan, and Singapore are enacting regulations on the issuance, distribution, and redemption of stablecoins. To mitigate stablecoin issuer credit risk, regulatory bodies are increasingly emphasising the need for full backing—often requiring over-collateralisation with cash equivalents like treasury bills. Many regulations also mandate periodic auditor attestations to ensure compliance and transparency. Despite variations in specific regulations, there is a consensus that stablecoin issuers should not offer interest to holders, delineating stablecoins from banking activity. EFFECTS ON CURRENT PLAYERS We anticipate these regulations will destabilise two main types of stablecoin issuers: 1.    Crypto-backed stablecoins that fail to meet cash equivalent definitions; and 2.    Non-compliant stablecoins (i.e., stablecoins that are interest-bearing, non-auditor attested, etc.). As a result, the market landscape is shifting, with non-compliant players being quickly replaced or blacklisted by exchanges. For instance, the MiCA regulations enacted in August 2023 led to the banning of USDT on major exchanges like Binance and Coinbase in the EU, causing a short-term rise in USDC and EURC trading volumes. This disruption creates significant opportunities for regulation-compliant stablecoin issuers to fill resulting market gaps. Non-incumbent players can now challenge established competitors who dominate the market. We see regulated stablecoins as an essential part of the evolving Web3 and traditional financial ecosystem. Download our report to learn more: https://lnkd.in/gracWCHx Email us at [email protected] and [email protected] to understand how we can support your stablecoin ambitions. #Stablecoins #Payments #HK Sean Lee Lawrence Chu Patricia Cheung

Stablecoins can help us redefine how we manage our financial lives. However, their potential lies not just in the technology but in their integration into existing financial infrastructure. In our joint report, Quinlan & Associates and IDA explore pathways to stablecoin mass adoption, comparing business-to-consumer (“B2C”) and business-to-business-to-consumer (“B2B2C”) models, and provide the case for a B2B2C approach. 1.    Seamless User Activation Imagine accessing stablecoins effortlessly from your existing bank or payment app. Banks and payment processors already have established relationships with millions of users. Integrating stablecoins into the offerings of trusted partners effectively circumvents the need to build an entirely new system and acquire customers from the ground up. Users can adopt stablecoins without grappling with new, unfamiliar tools like figuring out how to set up a Web3 wallet. Instead, they can access stablecoins and initiate transactions within the platforms they already trust and understand. For consumers, this means stablecoins are just another feature in their financial toolkit – no steep learning curve, no behavioural shifts. 2.    Rapid Scaling Stablecoins can serve as more than just a payment tool – they can be embedded into a range of financial services. While payments represent a natural starting point, stablecoins can also be used for investments, lending, and deposits, seamlessly embedding into the real economy. To expand stablecoin use cases rapidly, leveraging the existing infrastructure of trusted partners becomes crucial to eliminate user scepticism that can often be a hurdle in a direct B2C approach. Although a B2B2C path may involve longer lead times for partnership discussions and integration, the payoff is clear: a robust, scalable network that unlocks stablecoin adoption at a rapid pace. Stablecoins have the potential to transform financial systems, not by replacing them outright but by enhancing their functionality and reach. By integrating with established institutions, they can drive innovation and reshape the way we interact with money. Download our report to learn more: https://lnkd.in/gracWCHx Email us at [email protected] and [email protected] to understand how we can support your stablecoin ambitions. #Stablecoins #Payments #HK Sean Lee Lawrence Chu Patricia Cheung

The stone from another mountain can polish jade… How can Hong Kong learn from other jurisdictions to build a future framework for ridesharing? Governments worldwide have adopted various models for ridesharing licensing, aiming to balance regulatory oversight, service quality, and market access. This has resulted in a diverse competitive landscape across different jurisdictions. We has identified three models across the globe: 1. OPEN ACCESS MODEL The open access model imposes minimal restrictions on platforms and drivers. Basic requirements, such as clean criminal records, are enforced, but safety standards are primarily set by the platforms themselves. This model supports flexibility and dynamic pricing, which helps align supply with demand. 2. CONTROLLED ACCESS MODEL The controlled access model offers a more balanced approach. Drivers can participate by meeting specific requirements, such as obtaining insurance and adhering to safety standards. This model often integrates ridesharing regulations with those governing taxis, applying consistent standards across both sectors. 3. RESTRICTED ACCESS MODEL The restricted access model is the most stringent. It establishes a separate licensing regime for ridesharing, with strict safety regulations, driver qualifications, and fare controls. This model ensures robust oversight but may limit market flexibility. We believe Hong Kong should develop a licensing framework that carefully considers the needs of consumers, service providers, and regulators, fostering innovation while maintaining safety and service quality. There are some great examples of how the public and private sectors in some countries have transformed their taxi industries, which Hong Kong should look to learn from: 1. Shenzhen Taxi Platform In Shenzhen, the Municipal Bureau of Transport collaborated with a Pt2Pt transport provider to launch an integrated online platform for all taxis in the city. Within six months, the platform improved service quality, increased driver incomes, and enhanced customer satisfaction by optimising routes, enabling easier hailing, and supporting digital payments. 2. k.ride This ride-hailing app, tailored for tourists, offers features like international phone number registration, overseas credit card payments, and auto-translation in over 100 languages. By removing barriers to communication and payment, k.ride creates a seamless experience for visitors. Drawing from these global practices, Hong Kong can design a ridesharing licensing model that caters to both residents and tourists. By learning from successful international models and tailoring them to local needs, our city can create a world-class point-to-point transport ecosystem. Download our full report to learn more: https://lnkd.in/gZv5kM-b #hongkong #transport #taxis #ridesharing #ridehailing

Are crypto cards the next big thing in payments? Or are they a stepping stone to something even greater? Many brokerages and exchanges have introduced payment cards, such as Crypto.com's Visa card. As more crypto exchanges roll out their cards, could this trend help integrate cryptocurrencies into everyday payments? In our joint report with IDA, we examine some of the pros and cons of crypto card payments. THE ADVANTAGES Crypto cards from exchanges aim to add utility to cryptocurrencies in trading accounts, much like traditional brokerage payment cards. Spending is directly deducted from account assets, allowing users to easily access trading gains. Since these cards rely on established payment networks (e.g., American Express, Mastercard), they provide access to existing merchant networks, enabling users to spend crypto on a wide range of goods and services. THE DRAWBACKS There are notable barriers to using crypto payment cards. Users must still top up their trading accounts, often incurring additional fees, and a gap remains between traditional payment systems and crypto. Moreover, the primary purpose of these cards is to enhance brokerage services rather than replace conventional payment methods. This focus means that crypto card users will largely be limited to digital asset investors, inhibiting broader retail adoption. Additionally, these payment cards do not leverage the unique properties of distributed ledger technology (DLT) for settlement. Payments to merchants are still made in fiat currency, leading to the same settlement delays as traditional cards and bypassing the programmable features of stablecoins. Crypto cards essentially serve as a bridge for users to access their assets rather than integrating stablecoins into the payment infrastructure. THE FUTURE While crypto cards may represent a step towards the future of digital payments, their use is confined to digital asset investors, and they miss out on the advantages of DLT-based currencies. Ultimately, these cards rely on existing payment systems and do not achieve a transformative shift in payments. We believe the integration of regulated stablecoins into payment infrastructure presents a significant opportunity to address payment inefficiencies and link Web3 with traditional economies. Download our report to learn more: https://lnkd.in/gracWCHx Email us at [email protected] and [email protected] to understand how we can support your stablecoin ambitions. #Stablecoins #Payments #HK Sean Lee Lawrence Chu Patricia Cheung

What future do you envision for Hong Kong's point-to-point transport market? In our latest report, we identify two key priorities for transforming Hong Kong’s point-to-point transport sector: 1. Optimising our current taxi services; and 2. Legalising ridesharing. We believe that legalising ridesharing, in particular, will introduce healthy competition that will encourage taxi service providers to improve their offerings and meet evolving customer expectations. While progress is underway—such as the rollout of the taxi fleet regime this year, which includes vehicle updates, driver training, and technology adoption—the efforts remain limited in scope. For example, only 19% of taxis are currently part of the new regime. Moreover, certain critical improvements, like dynamic pricing models, remain absent. Smart meter installations, though promising, are being driven by private-sector initiatives rather than government mandates, leaving room for broader, systemic changes. To optimise Hong Kong’s taxi services, we propose focusing on four critical areas: 1. ACCESSIBILITY: Implement dynamic pricing to balance supply and demand while including more wheelchair-accessible vehicles. 2. SAFETY: Enforce stricter standards for vehicle and driver age to reduce the risk of accidents. 3. TRANSPARENCY: Improve fare and route visibility, ensuring drivers consistently provide receipts to passengers. 4. QUALITY ASSURANCE: Introduce mandatory, regular vehicle inspections and training programmes for drivers to uphold service standards. Our recommendations draw from practices in other regions. For example: 1. Dynamic pricing: Singapore allows taxi companies and ridesharing platforms to implement dynamic pricing models, including the option to offer flat rates for app-based bookings. 2. Wheelchair accessibility: All black taxis in London are wheelchair accessible and feature an induction hearing loop, high-visibility grab handles, and meet specific minimum vehicle size requirements. 3. Audio and video recording: Macau requires taxis to be equipped with audio and video recording devices, with access to the recordings restricted to legal purposes. 4. Smart terminal installation: In Beijing, all cruising taxis are mandated to install smart terminals that support digital payments and satellite positioning. We believe these initiatives can help the local taxi industry optimise supply to better align with demand while enhancing overall service quality. What are some other suggestions you have? Feel free to share your comments below. Download our full report: https://lnkd.in/gZv5kM-b #hongkong #transport #taxis #ridesharing #ridehailing

Stablecoins offer significantly lower online transaction fees than digital wallets, debit cards, credit cards, and bank transfers. Despite this cost advantage, they account for just 0.2% of global e-commerce transactions. In a joint report with IDA, we examine the factors hindering stablecoin adoption in the real economy. THEORETICAL ADVANTAGE In theory, stablecoins address several payment issues faced by merchants. Settlement times for domestic and cross-border transactions are often slow, affecting cash flow. Cross-border payments, typically processed via bank transfers, provide merchants with limited visibility over fund movements. Stablecoins, leveraging distributed ledger technology, enable real-time settlements with improved transparency. Transactions are settled atomically, allowing all parties to track the status and outcome. Moreover, stablecoin payments are 0.5-5.7% cheaper than traditional methods. However, adoption remains low among both users and merchants. LOW DEMAND-SIDE ACCEPTANCE Globally, only around 30,000 merchants accept cryptocurrency as a payment method. Regulatory uncertainty is a key concern, as most stablecoins lack the protective measures associated with traditional currencies, such as capital adequacy and reserve requirements. Many stablecoins also operate outside established regulatory frameworks, offering limited safeguards for users and merchants. Additionally, negative perceptions persist, with some viewing stablecoins as volatile or associating them with scams. Risk-averse merchants thus avoid adoption, perceiving stablecoins as useful but risky. These factors contribute to low acceptance in key functions like trading, savings, deposits, lending, payments, and supply chain financing. Even regulated stablecoins by financial institutions often remain confined to specific ecosystems to ensure easier compliance with banking regulations. This lack of protection and limited acceptance create a disconnect in the utility of stablecoins, restricting their role in real-world payments. However, we believe that there is a role for non-captive, regulated stablecoins in revolutionising real-world payments. Download our report to learn more: https://lnkd.in/gracWCHx Email us at [email protected] and [email protected] to understand how we can support your stablecoin ambitions. #Stablecoins #Payments #HK Sean Lee Lawrence Chu Patricia Cheung

Do you want the Hong Kong government to legalise ridesharing in the city? According to a recent survey conducted by Takungpao.com, an overwhelming 84% of respondents believe that Hong Kong’s point-to-point transport system needs a significant overhaul. 87% support the legalisation of ridesharing, with 69% seeing it as a step towards fostering an industry with healthy competition. New market players could incentivise traditional taxi service providers to enhance their service quality, ultimately benefiting consumers.   Across the APAC region, most markets have already established clear regulatory frameworks for ride-hailing platforms. These frameworks generally fall into 3 categories: 1.    TAXI-ONLY HAILING SERVICES In Hong Kong, only licensed taxis can operate as ride-hailing vehicles. Private cars are not permitted to provide these services unless they hold a hire car permit. 2.    RESTRICTED HYBRID HAILING SERVICES Users can hail both licensed taxis and private vehicles but with strict conditions. For instance, in Japan, private vehicles can be booked through ride-hailing platforms, but their operations are restricted by time and location. These drivers are hired and managed by taxi companies, ensuring compliance with insurance and training requirements. 3.    UNRESTRICTED HYBRID HAILING SERVICES In this model, users can hail both traditional taxis and private vehicles without significant restrictions. Mainland China exemplifies this approach, where platforms accommodate various private vehicles and taxis. While private drivers are not employed by the platforms, the platforms remain responsible for ensuring operational safety. Compared to its APAC counterparts, Hong Kong stands alone in its stance on ride-hailing. To keep pace with global standards, our city needs to develop a legislative framework that promotes healthy competition while balancing the interests of key stakeholders. Download our full report here: https://lnkd.in/gZv5kM-b. #hongkong #transport #taxis #ridesharing #ridehailing

Non-USD-pegged stablecoins are the next big thing the global market needs. Among the fiat-referenced stablecoins available in the market, a staggering 99.5% are denominated in USD. Names like USDC, USDT, and FDUSD dominate the space, shaping many of the conversations around stablecoins. But what if we looked beyond the dollar? In our latest report with IDA, we explore a critical gap in the stablecoin market: the need for non-USD-pegged stablecoins. WHAT IS THE GAP? While USD-backed stablecoins have taken centre stage, the realities of the global payment landscape paint a different picture – one in which other currencies play an equally vital role. 83% of countries worldwide do not use the USD as their official or secondary currency for transactions. In these regions, day-to-day retail and commercial payments are primarily conducted in local currencies. For residents and tourists alike, USD-pegged stablecoins offer limited utility when transacting within these markets. Despite the USD’s prominence, nearly half of global cross-border payments processed via Swift are settled in currencies like the Euro, Yen, Pound, and others. This demonstrates the significant role of non-USD currencies and highlights an untapped opportunity for stablecoins pegged to local currencies. Meanwhile, among the top 15 stablecoins ranked by market capitalisation, the first non-USD-pegged stablecoins (EURT) rank 13th, while the other stablecoins within the ranking are USD-linked. WHY DO NON-USD STABLECOINS MATTER? As the global stablecoin market matures, the emergence of non-USD-pegged alternatives could be the next step in unlocking widespread adoption and utility. Non-USD stablecoins can provide immediate value in domestic transactions for economies reliant on their own local currencies. Beyond that, stablecoins hold the potential to streamline cross-border transactions and contribute to better access to global markets. WHAT ARE THE CHALLENGES OF NON-USD STABLECOINS AND THE PATH AHEAD? The development of non-USD stablecoins isn’t without hurdles, the most notable being regulatory uncertainty. If regulators in one jurisdiction provide more clarity on local stablecoins, the stablecoins of another currency could naturally thrive. Upon Japan passing the stablecoin bill, we’ve observed numerous yen-backed stablecoins launched by FIs and industry coordination. There are also developments around UK’s MiCA and Singapore’s stablecoin regulatory framework that are providing greater confidence to issuers and users alike. With the HKD pegged to the USD, there is a unique opportunity for HKD-backed stablecoins that retain stability while serving regional needs. Download our report to learn more: https://lnkd.in/gracWCHx Email us at [email protected] and [email protected] to explore how your organisation can lead the next wave of stablecoin innovation. #Stablecoins #Payments #HK Sean Lee Lawrence Chu Patricia Cheung

Did you know that even after a decade of being in the Hong Kong market, Uber continues to operate in a legal grey area? Hong Kong’s Pt2Pt transport system offers three primary options: 1.    Taxis; 2.    Private hire cars; 3.    Ridesharing platforms. Among these, taxis boast the largest fleet and cater to a broad range of needs. Private hire cars, though smaller in fleet size, are typically reserved for high-end transport or specific purposes, such as shuttling customers to hotels. Ridesharing, despite operating in a regulatory grey area, has reshaped Hong Kong's transportation landscape since entering the market in 2014. Over the past decade, a major ridesharing platform has facilitated over 1.44 billion kilometres of trips in Hong Kong. While the total number of trips it has facilitated accounts for ~3.8% of those offered by taxis over this period, its rapid growth underscores the rising demand for ridesharing services. Despite the dominance of street taxis and taxi-hailing apps, there are clear gaps in the current value chain that need to be addressed. 🙋 HAIL Tourists face significant hurdles, such as requiring a local phone number to register for taxi-hailing apps. Customers often lack clarity on fares, and dynamic pricing—critical for managing supply during peak hours—is unavailable. Taxis also have operational constraints, such as limited seats for group travel, accommodating special needs in advance (e.g., wheelchair access), and cross-district or cross-border trips. 🚗 RIDE Once onboard, passengers typically have limited visibility of the route and estimated arrival time, opening up the potential for detours. With an average driver age of 58 and minimal additional training from taxi-hailing platforms, trip safety and transparency have considerable room for improvement. 💸 PAY Cash remains the dominant payment method, with limited adoption of digital payment solutions. This creates notable frictions, such as difficulties in providing change. Receipts are also typically issued only upon request, rather than automatically via digital channels. We believe the introduction of new competition, namely ridesharing platforms, has the potential to deliver more comprehensive, digitalised, and transparent Pt2Pt transportation services to Hong Kong consumers. Download our latest report to learn more: https://lnkd.in/gZv5kM-b #hongkong #transport #taxis #ridesharing #ridehailing

Stablecoins are not just reshaping crypto markets. They’re challenging inefficiencies plaguing our traditional financial systems. From slashing costs to breaking time barriers, stablecoins are rewriting the rules of global finance. But what does this mean for businesses, consumers, and economies worldwide? Here’s how they are changing the status quo: 1.    Cost Reduction Traditional financial systems often rely on multiple intermediaries, each charging fees that inflate costs for consumers and businesses. Cross-border payments, for example, incur an average cost of 6.5% globally, according to The World Bank. Stablecoins cut through these layers and reduce the need for intermediaries, streamlining the payment process, and ultimately slashing cost. 2.    Greater Transparency Trust in traditional finance often hinges on opaque systems and processes where intermediaries control transaction flows, leaving users in the dark about the status of their transactions. Stablecoins, built on blockchain, enable transactions to be automatically verified and recorded, providing senders and recipients full visibility of the transaction – unlocking new levels of trust and accountability. 3.    24/7 Availability Settlement processes are bound by business hours, public holidays, and time-zone differences. Stablecoins effectively break these barriers, enabling around-the-clock availability and representing a significant leap in flexibility and convenience for global transactions. 4.    Rapid Processing Traditional transactions are slowed by reconciliation delays between payment systems and intermediaries, which can take as long as 5 days of processing time according to PYMNTS. Stablecoins allow near-instant settlement, becoming a game-changer for time-sensitive transactions. We are already seeing many institutions in the traditional financial services space venturing into the issuance and use of stablecoins. PayPal USD enables seamless transfers between PayPal accounts and compatible wallets. Its integration with Xoom for zero-fee cross-border payments demonstrates how stablecoins are redefining the proposition with greater cost and efficiency. In Japan, regulatory clarity has spurred innovation. Financial institutions like MUFG, HOKKOKU FINANCIAL HOLDINGS, and Sony Bank have all launched yen-backed stablecoins, demonstrating growing appetite for stablecoin-enabled financial services. So, what’s next? Looking ahead, we expect stablecoins to play a growing role in financial ecosystems, from payments, remittances, to other innovative financial applications. Explore more stablecoin applications in our full report: https://lnkd.in/gracWCHx Email us at [email protected] and [email protected] to understand how we can support your stablecoin ambitions. #Stablecoins #Payments #HongKong #DLT #Blockchain Sean Lee Lawrence Chu Patricia Cheung