Stablecoins are no longer just a crypto niche—they're becoming a mainstream financial innovation, drawing attention from Wall Street veterans to Hong Kong regulators. With clear regulatory frameworks emerging in key markets and traditional financial institutions stepping into the space, stablecoin-related investments are gaining momentum. Among the most compelling opportunities for investors is the fintech ETF with concentrated exposure to this transformative trend.
One fund stands out: Fintech ETF (159851). It tracks the CSI Fintech Theme Index, which includes companies deeply involved in blockchain infrastructure, digital payments, stablecoins, and central bank digital currencies (CBDCs). With over 21% weight in stablecoin and digital RMB-related stocks, this ETF offers one of the highest concentrations of next-generation financial technology exposure available today.
Regulatory Momentum Fuels Stablecoin Growth
Recent legislative developments have laid the foundation for stablecoin adoption across major economies.
In May 2025, the U.S. Senate passed the GENIUS Act, establishing a federal regulatory framework for payment stablecoins. Just two days later, Hong Kong’s Legislative Council approved its Stablecoin Ordinance, set to take effect on August 1, 2025. This law introduces a licensing regime for stablecoin issuers and mandates that Hong Kong dollar-pegged stablecoins maintain full reserve backing.
👉 Discover how global regulation is shaping the future of digital finance.
These moves signal growing institutional legitimacy. As rules become clearer, banks, fintech firms, and asset managers are accelerating their entry into the space.
Who’s Building the Stablecoin Ecosystem?
The stablecoin value chain now involves a diverse mix of players—from global banks to tech giants.
Key Participants in Hong Kong:
- Standard Chartered Bank, in partnership with Ant Group and Hong Kong Telecom, has formed a joint venture to test stablecoin issuance under the HKMA’s sandbox program.
- JD ChainTech and Oanbit Innovation Technology have formally applied for HKD-pegged stablecoin licenses.
- Ant Group is preparing applications in both Hong Kong and Singapore.
- Over 40 licensed institutions can now offer virtual asset trading through integrated accounts, including Guotai Junan International, Futu Securities, Tiger Brokers (via Tianfeng International), and Dongfang Asset Management’s Haifu Securities.
Globally, major financial institutions like HSBC and Barclays are also advancing stablecoin initiatives, exploring use cases in cross-border settlements and tokenized assets.
How Do Stablecoins Generate Revenue?
Understanding the business model behind stablecoins reveals long-term profit potential beyond speculation.
Core revenue streams include:
- Transaction and minting fees
- Interest from reserve asset investments
- Compliance and auditing services
- Payment processing integration
For example:
- Tether (USDT) earns primarily from deposit/withdrawal fees and yield on its reserves, which consist of commercial paper and U.S. Treasuries.
- Circle (USDC) offers free minting but generates income through redemption fees and interest on reserves—92% of which are short-term U.S. Treasury bills, custodied by BlackRock.
With Hong Kong planning similar reserve requirements for HKD-backed stablecoins—likely including cash and short-term government debt—the model is poised for regional replication.
Technology Infrastructure: The Backbone of Digital Finance
Beyond issuance, the underlying tech stack is critical. This includes:
- Blockchain protocols for issuance
- Digital wallets and payment gateways
- Compliance tools for KYC/AML
- Custody solutions
Several A-share listed companies play vital roles here:
- Lakala – Leading in digital payment infrastructure
- Sifang Jinchuang – Provides blockchain solutions for financial institutions
- Hengbao Co. – Develops secure hardware for digital currency storage
- Feitian Technologies – Specializes in authentication and encryption tech
These firms form part of the 21.63% weight in fintech ETF (159851) dedicated to stablecoin and digital RMB themes.
Why Fintech ETF (159851) Stands Out
Among all available options, the CSI Fintech Theme Index—tracked by Fintech ETF (159851)—is the most direct way to gain diversified exposure to this evolving ecosystem.
Key Features:
- 57 constituent stocks, covering cutting-edge sectors like blockchain, AI in finance, cloud computing, and digital payments
- Focus on companies applying advanced technologies across financial services
- High concentration in innovative sub-themes: stablecoins (13.4%), digital RMB (8.2%), internet brokerage, and financial IT
This isn’t just another financial sector fund—it's a bet on the future of finance itself.
Investment Profile: High Growth, High Flexibility
1. Small-Cap Bias with High Upside Potential
As of June 2025:
- Average market cap: 228.9 billion CNY
- Median market cap: 102.16 billion CNY
- Nearly half of holdings have market caps below 100 billion CNY
While the top two holdings—East Money (Tonghuashun) and Tonghuashun—account for significant weight, the index retains strong small-cap characteristics, offering higher growth sensitivity.
2. Exceptional Market Elasticity
The index delivered an eye-popping 117% return in just over a month following policy stimulus in September 2024. Six of the top ten components doubled during that rally.
With a one-year annualized volatility of 43.55%, it outpaces most sector indices—ideal for investors seeking aggressive upside when sentiment turns positive.
3. Strong Long-Term Performance
Despite high volatility, the fund has consistently outperformed broader markets:
- Outperformed CSI 300 by 22.65% in 2023
- By 17.68% in 2024
- Even slightly beat the benchmark in 2022 (-21.4% vs -21.87%)
Over five years, the fintech index generated a total return of 30.8%, compared to just 4.59% for the CSI 300 full-return index.
👉 See how next-gen financial systems are redefining investment returns.
Frequently Asked Questions (FAQ)
Q: Can mainland Chinese investors directly invest in stablecoins?
A: No, direct investment in most stablecoins is restricted for mainland investors due to current capital controls and regulatory policies. However, exposure can be achieved indirectly through listed fintech companies involved in blockchain infrastructure or digital currency development.
Q: Is Fintech ETF (159851) only about cryptocurrencies?
A: Not at all. While it includes exposure to blockchain and stablecoins, the ETF covers a broad range of financial innovation—including AI-driven trading platforms, internet brokers, payment processors, and cloud-based financial systems.
Q: How risky is investing in this ETF?
A: The fund carries medium to high risk (R3 level) due to its high volatility and concentration in small-cap growth stocks. It's best suited for balanced or aggressive investors (C3 and above) with a long-term horizon who can tolerate short-term fluctuations.
Q: What role does regulation play in this space?
A: Regulation is a double-edged sword—it brings legitimacy and scalability but also compliance costs and operational constraints. Recent laws in the U.S. and Hong Kong are net positives, creating clearer paths for institutional participation.
Q: How often does the index rebalance?
A: The CSI Fintech Theme Index reviews its constituents quarterly, ensuring timely inclusion of emerging innovators while removing laggards—keeping the portfolio aligned with real-world technological shifts.
Final Thoughts: Positioning for the Next Decade of Finance
As one Wall Street maxim goes: "Be part of building the new internet-scale financial system." The fusion of traditional finance with blockchain-based innovation—led by stablecoins—is no longer theoretical. It's happening now, backed by regulators, banks, and tech leaders alike.
While still early-stage in many regions, the trajectory is clear. For investors looking to capture this shift without picking individual crypto assets, Fintech ETF (159851) offers a diversified, liquid, and strategically positioned vehicle.
👉 Explore how you can position yourself at the forefront of financial innovation.
Remember: This is not a short-term trade. It's a long-term play on structural transformation—one where staying informed and agile matters more than timing perfectly.
Note: The Fintech ETF passively tracks the CSI Fintech Theme Index (base date: June 30, 2014; launched June 22, 2017). Historical performance (2020–2024: +10.46%, +7.16%, -21.40%, +10.03%, +31.54%) does not guarantee future results. Index composition adjusts periodically per official rules. Stock mentions are illustrative only and do not constitute investment advice or reflect any fund’s actual holdings. Invest with caution—past performance is not indicative of future returns.