Hong Kong Opens Stablecoin Licensing: Banks and Brokers Rush In

On August 1, Hong Kong’s Stablecoin Ordinance officially came into effect. The HKMA released detailed licensing guidelines covering capital, custody, KYC, reserves, and governance requirements.

Banks Lead the Race

Top banknote-issuing banks like BOCHK and Standard Chartered are expected to apply first. They hold regulatory and institutional advantages under Hong Kong’s currency system. Each stablecoin must maintain full fiat backing under strict bank custody.

HKMA will only issue a few licenses in the first batch. Applicants must submit by September 30 to be considered. Issuers not applying within three months face shutdown by November.

Many players are preparing applications now. State-owned enterprises, sandbox firms, and fintech giants are all participating. Application success will depend on real-world use cases and sustainability.

Target scenarios include asset tokenization, cross-border payments, and crypto trading. These use cases will determine which firms get approval.

Securities firms will initially focus on stablecoin trading, custody, and consulting services. They are also exploring tokenized asset portfolio services. So far, 44 brokers have upgraded their Type 1 licenses.

Hong Kong’s top brokers are racing to secure crypto licenses now. Failure to do so risks losing competitiveness in digital finance. Major Chinese brokers like Guotai Junan and Eastmoney have already upgraded.

Regulatory Warnings

HK regulators warn of hype and speculative risks ahead. Investors must evaluate asset backing and project viability carefully. Concept tokens without substance could still re-emerge despite new rules.

Some firms are exploring CNH-backed stablecoins for cross-border payments. For Instance, China Asset Management Company (Hong Kong) launched multiple tokenized funds this year. The Hua Xia RMB Digital Currency Fund became the first on-chain offshore RMB fund. Industry experts view this as a landmark event exploring offshore RMB stablecoin possibilities.