Hong Kong Approves Stablecoins: The Race Is On

On August 1, Hong Kong's new Stablecoin Regulation officially took effect. The Hong Kong Monetary Authority (HKMA) has issued detailed licensing guidelines covering capital requirements, custody, KYC, reserves, and governance — paving the way for major financial institutions to join the race.

1. Leading Banks Take the First Step – Stablecoins Must Be 100% Backed by Fiat

Major banks like BOCHK and Standard Chartered are expected to be among the first applicants, leveraging their regulatory advantages and institutional infrastructure. Each licensed stablecoin must be fully backed by fiat currency under strict bank custody.

HKMA will grant only a limited number of licenses in the first round. Applications must be submitted by September 30. Issuers who fail to apply within 3 months will be forced to shut down by November.

2. Fintech, Sandbox Firms, and State-Owned Enterprises Join the Race

State-backed enterprises, fintech companies, and firms in the regulatory sandbox are actively preparing applications. HKMA will prioritize projects with real-world use cases and long-term sustainability.

Targeted Use Cases Include:

 - Asset tokenization

 - Cross-border payments

 - Crypto trading and settlement

3. Securities Brokers Upgrade Licenses to Offer Stablecoin Services

So far, 44 securities brokers in Hong Kong have upgraded their Type 1 licenses to engage in stablecoin-related services. Key offerings include stablecoin trading, digital asset custody, and portfolio advisory services.

Top mainland Chinese brokers like Guotai Junan and Eastmoney are leading the push, aiming to stay competitive in the evolving digital finance space.

4. Regulatory Warning – Speculative Risks Still Remain

Despite the new legal framework, HKMA has warned against hype-driven speculation and unstable token projects. Investors are urged to thoroughly assess each stablecoin’s asset backing and project viability.

Concept-only or low-substance tokens may still emerge under the new rules, posing ongoing risks.

5. CNH-Backed Stablecoins Emerge as a Cross-Border Trend

Some firms are now exploring off-chain CNH-backed stablecoins for international settlement. For example, China Asset Management (Hong Kong) has launched several tokenized funds this year, including the RMB Hua Xia Digital Currency Fund — the first off-chain RMB stablecoin fund in the region.

Industry experts view this as a major step in experimenting with off-chain RMB stablecoin models.