Hong Kong moves to issue 'stablecoin licenses'… reviewing 36 applications

Hong Kong’s financial regulator is moving ahead with procedures to issue stablecoin licenses, separate from mainland China’s regulatory stance on digital assets.

According to CNBC on the 10th (local time), Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), said at a Legislative Council meeting on the 2nd that he "hopes to make a decision on whether to approve licenses by March," adding that authorities are currently reviewing 36 stablecoin issuance applications.

Hong Kong passed a stablecoin ordinance in May, which took effect in August. The bill stipulates that anyone issuing stablecoins in Hong Kong, or issuing stablecoins pegged to the Hong Kong dollar, must obtain a license from the authorities.

In a memo, the HKMA cited cross-border payments and banks’ tokenised deposit systems as key use cases for stablecoins. Tokenised deposits are a structure that implements traditional bank deposits in digital form on a blockchain.

Jordan Wain, Policy Advisory Lead at Chainalysis, said, "More than half of the value of transactions recorded on blockchains currently occurs in stablecoins," adding that "stablecoins are a core element of the digital-asset ecosystem."

Mainland China, however, is maintaining its existing regulatory stance. CNBC reported that in October last year, regulators including the People’s Bank of China conveyed concerns about Hong Kong’s stablecoin plans, delaying the process. China imposed a blanket ban on digital-asset trading in 2021, and has recently reaffirmed the ban on digital-asset activities, including the unauthorised issuance of yuan-pegged stablecoins, in a joint statement.

Monique Taylor, an academic at the University of Helsinki, said, "Stablecoins can clash with a state’s controls over currency, payments and capital flows," adding that "Hong Kong’s approach is closer to a limited and cautious introduction than an across-the-board policy shift."

U.S. Treasury Secretary Scott Bessent said at the Senate Banking Committee that Hong Kong’s move to expand digital assets "could be interpreted as an attempt to build an alternative to U.S. financial leadership."

CNBC said Hong Kong’s licensing regime has a strong character of a supervisory experiment that leverages its autonomy. However, it also noted analysis suggesting Hong Kong is unlikely to allow a fully liberalised environment for digital assets.