Hkchain — Executive Summary
Project: Hkchain — a compliant payment Layer-1 purpose-built for HKD stablecoins. Status: Reference implementation running on a single-node development network and a five-validator permissioned test network. It began as the MVP demo prepared for the HKMA technical readiness meeting on 2026-05-11. Audience: HKMA supervisors; HK-licensed stablecoin issuers; independent auditors; institutional users.
What Hkchain is
A blockchain payment rail designed from the ground up around the Hong Kong Stablecoins Ordinance (in force since 2025-08-01) and HKMA's Supervision and AML/CFT Guidelines. Compliance primitives (identity, sanctions, Travel Rule, proof of reserve, audit reporting) are implemented as native chain modules, not as smart contracts on top. Every HKD transfer on a supported path, native or EVM-originated, passes through the same chain-level checks before it executes. The supported paths are a Cosmos MsgSend, an issuer's distribution, a redemption request and the extended ERC-20 transfer methods; the technical report states the current limits of that perimeter precisely (Section 10.2).
Why this framing
Existing stablecoin deployments rely on the issuer's Solidity contract (e.g., USDC's blacklister role) for compliance. Three structural weaknesses follow:
- Bypass risk — direct ERC-20 interaction, contract upgrades, or contract replacement break prior enforcement assumptions.
- Cross-issuer fragmentation — each issuer implements its own contract; cross-issuer settlement and supervisory reporting are ad-hoc.
- Supervisory opacity — HKMA has no single observational surface across issuers on a given rail.
Hkchain moves enforcement from the contract layer to the chain layer. Compliance is a precondition to inclusion, not a layer above it.
What Hkchain does today (MVP)
- Native HKD stablecoin — per-issuer denom (e.g.,
hkd.hsbc); mint and distribution governed by the issuer's primary key, redemption completed by the issuer's acknowledgement; per-issuer pause (global pause through governance) and a per-account freeze, which currently blocks redemption only. - Zero-threshold Travel Rule — every supported HKD transfer with a counterparty carries a Travel Rule payload (tier, institution identifiers and hashes of the off-chain IVMS 101 records); at or above HKD 8,000 a full-tier payload is required; a transfer without a valid payload is rejected before it executes.
- Six-level KYC registry with sub-role delegation (reviewer, officer, agent) and a chain-enforced spending-policy primitive for user-delegated agent sub-keys.
- Multi-signature Proof of Reserve — issuer attestation hash + registered auditor co-signature, with the mandatory random-day snapshot HKMA requires.
- AnteHandler decorator chain — seven gates (KycGate · Sanctions · TravelRule · Threshold · Velocity · RoleGate · AgentPolicy) covering screening, compliance enforcement, and user-policy enforcement on every supported HKD transfer. Threshold and velocity are advisory: they flag for review and never reject.
- Human-in-the-loop review — every flag carries an auditable reviewer + officer decision trail with on-chain evidence hashes.
- Supervisor observability — read-only dashboard across issuers (circulation, reserves, KYC distribution, sanctions, flag queue) and a block explorer that shows each recent transaction's gate trace. Export of reports in the supervisor's prescribed formats is on the roadmap.
- Public reserve verifiability — any holder can query which reserve attestation backs their current balance.
- Agentic payment + chain-enforced revocation — an HTTP 402 demo service; user-bound agent sub-keys spend within
daily_cap/per_tx_capenvelopes;MsgRevokeSubRoletakes effect from the next block, regardless of which service the agent is interacting with.
What makes Hkchain different
| Dimension | Typical stablecoin chain | Hkchain |
|---|---|---|
| Compliance enforcement | Contract-layer; bypassable | Chain-layer; binding on every supported HKD transfer path |
| Supervisor surface | Indirect; per-issuer | Unified, read-only cross-issuer |
| Reserve proof | Website PDF | PDF hash + multi-sig on chain + random-day |
| Travel Rule | Opt-in VASP-to-VASP | Chain-enforced on every supported HKD transfer |
| Agent commerce | Out of scope | Chain-bound spending policy + chain-enforced revocation |
Roadmap
Multi-issuer onboarding via governance · real-time sanctions oracle · Algorand Pure-PoS consensus migration · formal KYC provider attestation standards · AI-assisted flag triage. See AI-assisted compliance review and Green-energy RWA partnership.
Disclaimers
Hkchain provides the technical rail. Regulatory compliance remains the responsibility of licensed issuers and their supervising regulators. Capabilities described represent demonstrated behavior on the development and test networks; productionization requires additional security review, operational hardening, and regulatory engagement.
Appendix — HKMA guideline cross-reference
For per-requirement mapping of the Supervision and AML/CFT Guidelines onto specific Hkchain primitives — licensing and entity, reserve management, reserve reporting and disclosure, AML/CFT CDD and transaction monitoring, governance, supervisory access, and redemption — see docs/references/hkma-stablecoin-regulation.md.