Hong Kong Enters the Era of Stablecoin Licenses: "Stable" Rise Under High Thresholds

On August 1, 2025, the Hong Kong "Stablecoin Regulation" officially came into effect, marking the launch of the world's first comprehensive regulatory framework for fiat stablecoins. The implementation of the regulation means that Hong Kong has formally established a licensing system for fiat stablecoin issuers, further improving the regulatory framework for virtual asset activities in the region. While strengthening the financial stability defenses, it also reserves orderly development space for financial innovation.

****license window opens: the first batch is expected to land in early ****2026.

With the implementation of the regulations, the Hong Kong Monetary Authority (hereinafter referred to as the "HKMA") has simultaneously launched the first round of applications for stablecoin issuer licenses, which will be open until September 30, with a 6-month transition period to handle compliance transitions and related matters for institutions engaged in stablecoin issuance in Hong Kong.

The Monetary Authority encourages interested institutions to actively communicate their regulatory expectations before August 31; institutions that are well-prepared and hope to be considered early must submit their applications by September 30. According to the plan, the first batch of stablecoin issuer licenses is expected to be issued in early 2026.

It is worth noting that the Monetary Authority has repeatedly publicly "cooled down" the market, emphasizing that the development of stablecoins is not necessarily better the faster it goes, and there is a need to guard against sacrificing risk control for speed, urging the market to maintain rational expectations. This line of thinking is also reflected in the design of the access standards.

Threshold Regulation: Avoid Exponential Growth

The Monetary Authority adopts a highly prudent principle in licensing issuance, setting a high threshold. The Authority's president, Yu Weimen, has previously stated multiple times that only a few licenses are expected to be granted initially. Even for institutions that have entered the sandbox, it does not necessarily mean they will pass the review, and entering the "sandbox" is not a prerequisite for future license applications. All applications must undergo strict evaluations based on the quality of the submitted materials. The regulatory technical briefing on July 29 further clarified that compliance, specificity, and sustainability are the core requirements for licensing.

According to the regulatory requirements jointly issued by the Monetary Authority and the Financial Services and the Treasury Bureau, institutions planning to issue Hong Kong dollar-pegged stablecoins in Hong Kong must not only obtain a statutory license but also meet traditional financial levels of auditing, reserve disclosure, transparency requirements, and anti-money laundering obligations.

Previously, the Secretary for Financial Services and the Treasury of Hong Kong, Hui Chengyu, also pointed out that the regulatory principles are similar to those of traditional financial assets. Relevant issuers must comply with regulations regarding reserve asset management and redemption, including properly segregating client assets, and must complete redemption requests from stablecoin holders within one working day to meet user needs.

The Deputy Chief Executive of the Monetary Authority, Chen Weimin, stated frankly that the review focuses on the completeness of materials and the feasibility of concepts. For institutions lacking in technology and risk control capabilities, a more practical approach is to collaborate with other stablecoin issuance institutions to provide application scenarios, rather than pursuing the status of an issuer.

Focus on Payment Value: Distinguishing from Speculation

The value of stablecoins lies in payment, not investment. In various public statements, the Monetary Authority has consistently emphasized that the core attribute of stablecoins is as a payment tool based on blockchain technology, and its value through regulation integrated into the traditional financial system lies in the fulfillment of payment functions, rather than becoming a target for market speculation.

The chairman of the Hong Kong Financial Development Council, Hong Pi-zheng, clearly stated that stablecoins should be based on long-term goals, focusing on the deep transformation of payment infrastructure and the digitization of asset markets, rather than becoming short-term speculative tools.

Chen Weimin also reminds the public to be wary of conceptual bubbles and to avoid excessive market excitement. Even if institutions obtain licenses, there remains uncertainty in short-term profits. He calls on investors to maintain calm and independent judgment when interpreting market information.

The Financial Secretary of Hong Kong, Paul Chan, also pointed out in a signed article that the programmable features of stablecoins provide the possibility for payment automation and the restructuring of financial service processes, but their development should not be a "technology chase" or "tool frenzy"; it must be closely tied to the needs of the real economy.

anchoring the real economy****: from cross-border settlement to asset tokenization****

With the increase in regulatory clarity, the application of stablecoins is also accelerating towards the real economy. The first batch of stablecoins will focus primarily on cross-border trade settlement and Web3 scenario testing.

Xu Zhengyu pointed out in an interview that in the "Belt and Road" infrastructure projects, stablecoins are expected to become an important digital tool to address local currency fluctuations and enhance regional economic resilience.

Chen Maobo revealed that Hong Kong will continue to promote the tokenization of financial assets, planning to introduce a token settlement mechanism in areas such as green bonds, ETFs, and metal commodities, utilizing stablecoins to build a bridge between on-chain assets and trading currencies.

Yu Weiwen pointed out in a post on August 4 that Hong Kong banks are experiencing rapid growth in digital asset business development. After the introduction of relevant regulatory guidelines, more and more banks are expanding their sales of digital asset-related products and tokenized assets, as well as digital asset custody services. It is believed that the growth momentum in the field of digital assets in Hong Kong will continue, bringing new impetus to the development of wealth management business in Hong Kong.