Yu Weiwen: Steady Development of Hong Kong's Compliant Stablecoin Ecosystem

On April 10, the Hong Kong Monetary Authority announced the official issuance of stablecoin licenses to DPoint (a joint venture of Standard Chartered Bank, Hong Kong Telecommunications, and Anning Group) and HSBC under the Stablecoin Ordinance. The President of the Hong Kong Monetary Authority, Eddie Yue, published an article titled "Robust Development of Hong Kong's Compliant Stablecoin Ecosystem" in the official "HKMA Insights" column, pointing out that this licensing marks a new stage in the regulation of stablecoins in Hong Kong. Both licensed entities plan to issue Hong Kong dollar stablecoins in the first phase, focusing on four major scenarios: cross-border and local payments, tokenized asset trading, and innovative applications. As both institutions have banking backgrounds and have participated in CBDC experiments, this is conducive to exploring the synergies of "future payments." The Monetary Authority emphasized that the licensing threshold remains high, and the number of licenses will remain limited in the future. Subsequent measures, such as on-site inspections, will be implemented to ensure compliance operations by the licensees. This move aims to address the pain points of the real economy through compliant stablecoins under international regulatory trends, laying a solid foundation for Hong Kong as a digital financial hub.

Author: Eddie Yue

Source: Hong Kong Monetary Authority The Monetary Authority announced today that the Financial Commissioner has granted stablecoin issuer licenses to two institutions—DPoint Financial Technology Limited (a company formed by Standard Chartered Bank (Hong Kong), Hong Kong Telecommunications, and Anning Group, hereinafter referred to as DPoint) and HSBC, marking a new phase in the implementation of Hong Kong's stablecoin regulatory system.

Looking back at the development of Hong Kong's stablecoin regulatory system, from legislative consultation, drafting, and legislation to the implementation of the licensing system and the issuance of licenses, we adhere to the risk-based principle of "same activity, same risk, same regulation," establishing a regulatory framework that is both robust and flexible based on international regulatory standards. This framework aims to maintain the bottom line of managing financial stability, anti-money laundering, and investor protection risks while retaining the flexibility to adjust regulatory requirements in a timely and moderate manner according to the development of international regulatory trends and market changes. The goal is to enable compliant stablecoins to play a positive role in various application scenarios and effectively address pain points in the real economy and financial activities.

License Approval

As of the first phase application deadline on September 30, 2025, the Monetary Authority has received applications from 36 institutions. In the face of numerous applications, over the past six months, the Monetary Authority's regulatory team has worked overtime to comprehensively and deeply review each application based on the specific provisions listed in the ordinance, maintaining communication with applicants as needed to clarify doubts and request information, ensuring that the entire approval process is rigorous and fair.

The Monetary Authority has always emphasized that the licensing has a relatively high threshold, with two main considerations during the approval process: (1) whether the applicant has sufficient risk management capabilities and experience and complies with relevant regulations in Hong Kong and other regions; (2) whether the applicant can propose specific application scenarios and feasible business plans and development strategies. Among the 36 applications, DPoint and HSBC demonstrated their ability to manage risks prudently and presented concrete application scenarios and future development plans, thus receiving their licenses.

Application Scenarios and Development Directions

Both licensed issuers plan to first issue Hong Kong dollar stablecoins in the initial phase. Overall, their business plans, application scenarios, and development directions include:

1. Cross-border payments: Leveraging the advantages of stablecoins and utilizing the issuers' extensive international business and partner networks to provide efficient, transparent, and lower-cost cross-border payment methods for businesses and individuals while complying with regulations and requirements set by other regional regulatory authorities;

2. Local payments: Accelerating the application of stablecoins in Hong Kong by utilizing existing business infrastructure and customer base, providing individuals and merchants with secure, fast, and efficient transaction and settlement experiences;

3. Tokenized asset trading: As a settlement tool for tokenized asset trading, compliant stablecoins can facilitate real-time transactions on the blockchain, helping to explore opportunities in the tokenized asset market and enhance market liquidity; they will also explore using compliant stablecoins as collateral management applications;

4. Innovative applications: Fully utilizing the programmable characteristics of stablecoins to explore innovative applications such as conditional payments and supply chain financing.

Both licensed issuers have banking backgrounds and have participated in the Monetary Authority's experiments related to central bank digital currency (CBDC) and tokenized deposits, providing them with a deeper understanding of the functions and application scenarios of various digital currencies, which is beneficial for exploring the possibilities of "future payments." One of the issuers has formed a consortium with local telecommunications, payment, and digital asset companies, allowing compliant stablecoins to achieve synergistic effects. The two institutions plan to gradually introduce more different enterprises (such as scenario providers) to promote the application of compliant stablecoins after their business develops steadily, and will continue to expand the application scenarios of stablecoins, explore more overseas markets, and consider introducing other currencies based on business operations, market conditions, and international regulatory developments.

Risk Management Measures

Licensed issuers must implement prudent and comprehensive policies and risk management measures in accordance with regulatory requirements regarding reserve asset management, asset security assurance, price stability mechanisms, redemption arrangements, and technological security, and establish robust anti-money laundering systems. This includes using blockchain monitoring tools in daily operations to detect suspicious transactions and take appropriate follow-up actions, verifying the identities of stablecoin holders either independently or through reliable third-party partners to ensure the effectiveness of monitoring measures. Both licensed issuers demonstrated their capability to comply with and implement these measures in their applications.

Follow-up Work

Before officially launching their compliant stablecoins, licensed issuers must complete relevant preparatory work, including technology platform and system testing, implementation of risk management measures, and human resource arrangements. Based on the current business plans of the two institutions, we expect that regulated stablecoins in Hong Kong will be gradually launched from mid to late this year.

After the stablecoins are officially launched in the market, the Monetary Authority will conduct ongoing and effective supervision based on the business and risk nature of individual licensees through on-site inspections, off-site inspections, independent assessments, and meetings with the management of the licensees to ensure compliance with relevant regulatory requirements. We will also review the effectiveness of the implementation and the preparation for business expansion according to the business plans proposed at the time of application, ensuring that the policy objectives of issuing stablecoin licenses in Hong Kong are realized.

As for the institutions that did not receive licenses in the first batch of applications or other institutions that may apply in the future, the Monetary Authority will maintain communication and dialogue with them, reviewing these applications according to relevant laws and uniform regulatory standards and requirements. Regarding future license issuance and timing, we maintain an open yet cautious attitude, with no clear inclination at this stage. However, we must reiterate that considering the risks involved in issuance activities, user protection, and the market's capacity and long-term development, the licensing has a relatively high threshold. Even if licenses are issued in the future, the overall number of licenses will remain very limited. The effectiveness of operations and market responses after the two licenses are implemented will also help us make a more comprehensive assessment.

Looking ahead, many regions around the world are formulating regulatory rules for stablecoins. Major international financial organizations such as the Financial Stability Board and various regional regulatory authorities are actively researching and discussing various aspects of stablecoin operations and risk management, including regulatory models for large multinational stablecoin issuers, with expectations that global regulatory directions will become clearer. We will actively participate in these discussions and provide Hong Kong's implementation experience, and periodically review the design of Hong Kong's regulatory system in accordance with international regulatory trends and practical experiences, striving to lay a solid foundation for Hong Kong as a digital financial hub and provide a path for stablecoin regulation that balances innovation and robustness.

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