The reconstruction of the geopolitical order and the compliance of virtual assets may not be a major change unseen in the 21st century for Hong Kong. Last week, the Dubai gold market saw a rare “negative premium.” According to Bloomberg, citing sources, affected by the ongoing conflict in the Middle East, a large number of Dubai gold traders are selling off their inventories at a wholesale price of $30.00 USD per ounce lower than the London benchmark price in order to avoid indefinitely bearing storage and financing costs due to their inability to ensure timely delivery.

Although this “negative premium” for gold is mainly concentrated at the bulk wholesale level and has not yet affected retail gold prices, it is almost impossible to see in a normal market, because gold has always been regarded as one of the most liquid physical assets in the world. In theory, as long as there is a clear price difference, arbitrage funds will quickly transport it to markets with higher prices to smooth out all price dislocations. It’s just that this time, the arbitrage channel has been cut off by the real world.

This easily reminds people of the “negative oil price” that appeared in the oil market in 2020, and the logic behind it is the same: when the delivery of physical assets requires high transportation, insurance, and storage costs, and faces huge uncertainty, the “paper price” and “actual value” will be misaligned. In other words, gold is just a cut, and behind it is the problem of the entire asset flow channel, which also means that Dubai, as a global offshore financial center, is facing a functional stress test.

I. War Burns to Dubai, Cold Thinking of “Offshore Financial Center”

Dubai is not only a “safe haven” for global wealth, but also one of the most important entrepot trade hubs in the global gold market. According to customs and trade data, Dubai imported 1,392.00 tons of gold in 2024, with a total value of more than $100.00B USD, and the export scale was as high as $74.00B USD, which makes the UAE the second largest gold import and export center in the world. For example, a considerable proportion of gold mined in Africa and refined in the UAE, as well as gold transshipped from Switzerland and London to Asia, must pass through Dubai as a node.

It is worth noting that if you pull the historical curve of Dubai’s gold trade volume, you will find that 2022 is a very significant turning point. At that time, with the outbreak of the Russia-Ukraine conflict, Dubai’s gold import and export scale suddenly accelerated, and a large amount of funds and physical assets that originally flowed through the European system re-routed through Dubai to find a way out under the joint action of sanctions, compliance, and geopolitical division. This is actually an epitome of the logic of Dubai’s rise: other people’s crises are precisely its window of opportunity.

As a trade hub connecting Asia, Europe, and Africa, Dubai has attracted wealth accumulation from all over the world in the past two decades with its free flow of capital, low tax rates, and relatively stable political and business environment. From Russian oligarchs to global family offices to Middle Eastern oil capital, they all regard this place as an important node for asset storage, clearing, and circulation. More importantly, Dubai is often the beneficiary of every external geopolitical turmoil. It’s just that I didn’t expect that this time, the wind blew to Dubai itself.

The essence of “finance” is the financing of funds, and the premise of financing is that assets can flow efficiently and safely. Therefore, when the physical circulation channel is blocked, it will not only be the gold market that is affected. All physical and financial assets that rely on cross-border flow will face the same dilemma. What is at stake behind this is a more fundamental question – what is the first principle of an offshore financial center? The answer is simple: safety. Not tax rates, not registration convenience, not regulatory relaxation, these are the second level of competitiveness. The reason why funds are willing to park in a certain financial center, the first level is always the most simple thing: can your money be taken out at any time, and can it be safely transferred out when needed. Once this underlying assumption is cracked, the entire value system will begin to loosen.

II. Dubai Falls, Who is Qualified to Eat Enough?

In theory, there are not many options. Returning to Europe and the United States may not be realistic, because a large amount of funds chose to settle in Dubai in order to avoid sanctions risks, political risks, and stronger regulatory pressure. Turn to Singapore? On the surface, it is logical, but Singapore is small in size, lacks strategic depth, is highly dependent on the outside world, and under the compliance pressure of the FATF, the threshold for opening accounts and review requirements have continued to tighten in recent years, and it may not be able to undertake all spillover demands.

It is against this background that Hong Kong has begun to appear in more and more conversations again. Friends from Hong Kong-licensed virtual asset institutions have reflected to the author that the amount of business inquiries from the Middle East and related regions is showing a visible increase. They are mainly not from retail speculators, but more from family offices, cross-border trade settlement platforms, foreign trade companies, and other institutions and enterprises. Hong Kong is quietly undertaking the spillover of safe-haven funds from the Middle East conflict.

From a structural point of view, Hong Kong has a set of extremely special “combination advantages” in the current international financial market pattern, that is, as a free port for financial capital and with a sound financial governance and regulatory system. The first card is the institutional foundation of a free port for capital. Hong Kong still maintains the linked exchange rate between the Hong Kong dollar and the US dollar, and funds can enter and exit with a high degree of freedom; the second card is a highly mature monetary governance system and linked exchange rate system. For global funds, the US dollar is still the core transaction pricing unit, and Hong Kong has a mature US dollar liquidity infrastructure.

In addition, there is a deeper layer of logic hidden in this round of opportunities in Hong Kong: is there an asset that can achieve second-level transfer and all-weather settlement in the event of flight suspensions and transportation disruptions, and get rid of the constraints of traditional logistics and cross-border friction as much as possible? Yes, that is on-chain virtual assets, especially stablecoins. When the audit chain of the traditional banking system is lengthened due to geopolitical risks, this “frictionless, borderless, 7×24 hours” settlement method shows an advantage of almost dimensionality reduction.

III. Hong Kong × Virtual Assets’ “Historic Bus”

Since the Hong Kong Special Administrative Region government issued the virtual asset policy declaration on October 31, 2022, Hong Kong may be ushering in a rare historical window of opportunity where “timing and location” are superimposed. Hong Kong’s forte has never been to simply be a local market, but to organize funds with different systems, different currencies, and different risk preferences into a calculable, connectable, and clearable framework.

Hong Kong has been continuously building new digital financial infrastructure for more than three years, covering local licensed trading platforms represented by OSL HK and Hashkey Exchange, as well as supporting custody and tokenization services. What is more intriguing is that Hong Kong’s stablecoin regulatory framework is also gradually maturing after years of deliberation. On May 21, 2025, the Legislative Council of the Special Administrative Region passed the Stablecoin Ordinance Bill; on August 1, 2025, the Stablecoin Ordinance officially came into effect; in early 2026, the first batch of stablecoin licenses is expected to be issued one after another.

For those cross-border funds pouring into Hong Kong from the Middle East, this emerging stablecoin ecosystem means far more than just a new investment category. It represents that when the traditional banking system faces the risk of disconnection, a new type of clearing and settlement channel with sovereign-level compliance endorsement, all-weather operation, and not restricted by physical borders has finally emerged. At this stage, Hong Kong-licensed institutions such as OSL Group have begun to extend to compliant stablecoin management, asset tokenization, and enterprise-level payment solutions, which marks that compliant virtual asset platforms are growing into the infrastructure nodes of the next generation of cross-border global fund flows.

Written at the end: The more turbulent the world is, the more expensive certain assets, certain systems, and certain paths become. With the accelerated reconstruction of the geopolitical landscape, the rapid changes in the financial market, and the formal formation of stablecoin regulation, the significance of Hong Kong’s licensed virtual asset platform is being rewritten. This is not only an opportunity for Hong Kong, but also a historic moment for Hong Kong and a number of licensed virtual asset institutions to deeply embed themselves in the global trade cross-border payment and settlement system.

[Web3 Farmer Frank]