After getting a Stablecoins Ordinance passed in 2025, it's not a surprise that the Hong Kong Monetary Authority (HKMA) will be awarding their first stablecoin licenses to applicants this March, but don't expect all of the applications to get the green light since there will only be a couple passing inspection this time around. During a recent briefing with legislators, HKMA CEO Eddie Yue announced that his agency will approve a "very limited number" (i.e., about a dozen) of the 36 submitted stablecoin applications before late spring. This is not a delay; this was planned by the HKMA as part of its overall approach to stablecoins.
Passed bill May 2025. Live deadline August 1st. 36 applications received so far.
Apart from the above, the HKMA have also requested (among others): use cases; risk management; AML measures; and reserve mix; to also be considered. Review almost complete. Volume means nothing; survivorship is everything.
"Very few" isn't humble; it is a policy. In a joint statement, The HKMA and The SFC warned against "groundless enthusiasm or speculation." In other words, just because you apply doesn't mean you will get approved.
Reserve assets must be 100% backed at a minimum with the value of the underlying asset being equal to or greater than the value of the stablecoin in circulation. The HKMA expects all reserve assets will be backed at a higher percentage than 100%. What is an adequate backup? Cash, bank deposits with a term of less than three months, government-backed securities with a term of less than 12 months and tokenised deposits that have no access to any issuer's other assets and can be redeemed within a single day at par for the least amount of money (in transaction fees).
These are not goals; they are requirements!
Flashy infrastructure is rejected, Too many use cases with unclear definitions are rejected, and Crypto projects with weak AML controls are rejected. The HKMA is not in the business of approving the most crypto issuance in Asia. The HKMA wants to avoid having to regulate the next Terra or Luna within their regulatory authority. This isn't paranoid thinking; it is historical knowledge.
A group consisting of Animoca Brands, HK Telecommunications, and Standard Chartered's Hong Kong branch are applying together to obtain a license to launch stablecoins pegged to the Hong Kong Dollar. Additionally, JINGDONG Coinlink Technology and RD InnoTech were both in the Sandbox for 2024. These two companies aren't DeFi protocols trying to legitimize themselves through KYC processes.
These are bank and institutional players that already have built the infrastructure to comply with regulations.
Institutional heavyweights domestically and internationally will get the first licenses and use Cases such as Cross-border Payments in the Greater Bay Area or Tokenized Trade Settlements are concrete examples of how these licenses will create a Trickle Down Effect.
DeFi should not be confused with speculative investing. DeFi is not a yield farm masquerading as a payment rail.
The definition of "Regulatory Clarity" was defined by the Initial Licensees. If they get the Definition Wrong, Hong Kong could potentially lose the good standing it worked so hard to rebuild since the FTX Collapse of Global Confidence in Crypto Regulation. For this, there are no Second Chances.
Yue stated that any International Issuer must comply with the local laws of any country in which their Stablecoin is utilized. You will not only be answerable to the HKMA, but also every other regulator in every other country where your token has citizens respectively. This will eliminate 50% of the applicants.
The goal of Hong Kong is to position itself as a balanced and regulated site for cryptocurrency use by providing a middle ground between the extremes of countries that completely prohibit cryptocurrency and countries with very few to no regulations where even an innocent mistake could create a widespread lack of confidence in the financial system. Part of the implementation of a stablecoin regime is based on a licensing regime for Virtual Asset Service Providers (VASPs) to operate as exchanges and custodians for stablecoin custody. The comprehensive system of regulation around digital assets will be unmatched by any other major financial centre in Asia at this point.
Currently there is an estimated $300 billion worth of stablecoins in circulation and some experts predict that the number could increase to as much as $4 trillion. Any increase in total stablecoin liquidity concentrated in Asia will change those totals if Hong Kong receives a portion for approved stablecoin issuance. That is a very large potential market opportunity.
The challenge Hong Kong faces is that there is a delicate balance between moving cautiously to ensure that there is stability in the market and providing other competitors with ample time to develop competitive solutions that can be brought to market faster than their own. The present regulatory regime for stablecoin issuers in Singapore is based on the payments services regulations. In addition to Singapore, other jurisdictions such as the United Arab Emirates (UAE) have developed a Virtual Asset Authority to grant licenses for stablecoin issuers. If Hong Kong moves at too pace, it will have a very strong set of rules and regulations to govern and regulate stablecoins, but have little or no market share when stablecoins are brought to the market. No users = perfect regulatory environment.
When the regulations set such a high bar for eligibility, they run the risk of creating an oligopoly by way of regulatory control instead of competition. The first group of candidates to become approved could be all bank-related consortiums. That tells the rest of the blockchainable business world that the regulations in Hong Kong are created for existing banks; therefore, not innovative businesses.
Maybe that is the goal.
Yue did not name which candidates might be ready to receive a license or provide any information other than "March." This lack of information is intentional because the HKMA wants to avoid speculation relative to potential token pricing and/or the equity valuation of applicants before licenses are issued. The reality is that everybody works without sufficient information about what constitutes "quality" as applicable. The bar is set extremely high, and nobody knows how high until the report is released.
The first licensees evaluate if this regime is actually available to well-capitalized crypto companies or locked to traditional banking institutions. More important than count is composition.
Keep an eye out for stablecoins with a Hong Kong dollar reference to enter the market. Use cases for the Greater Bay Area include remittances, trade financing, and cross-border payments. The regime is validated if adoption picks up speed. If it stalls, regulatory overhead outweighed practical benefit.
The registry of the HKMA is currently empty. It won't be after March. The first cohort's performance and whether they generate real usage beyond vanity metrics will determine whether it fills.
Hong Kong is not in a hurry. It is building deliberately and with caution. March’s modest rollout is either the start of a framework too conservative to capture the market it aims to regulate, or the foundation for something much larger. When adoption data is released this summer, the direction should become clear.
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