Hong Kong Opens Stablecoin Licensing Window as Note-Issuing Banks Poised to Lead the Charge

On August 1, the "Stablecoin Regulations" officially came into effect in Hong Kong. The Hong Kong Monetary Authority (HKMA) subsequently released a series of accompanying regulatory guidelines for licensed stablecoin issuers, detailing requirements related to financial qualifications, personnel expertise, reserve assets, custodial and redemption protocols, jurisdictional alignment, and transitional arrangements.

According to information obtained exclusively by Securities Times, key note-issuing banks in the Hong Kong SAR, such as Bank of China (Hong Kong) and Standard Chartered Bank (Hong Kong), are expected to be among the first applicants for a stablecoin issuer license. This move is driven both by internal business strategies and in response to evolving regulatory momentum. Interest in applying has also emerged from mainland Chinese banks, sandbox participants, major central state-owned enterprises, and internet platforms holding payment licenses.

Initially, securities firms are anticipated to focus on stablecoin-related services such as trading, custody, financing, and consulting, alongside providing digital asset allocation linked to the tokenization of traditional assets. As of July, 44 securities and financial institutions have upgraded their virtual asset trading licenses, reflecting a net increase of three entities since the end of June.

The introduction of the HKMA’s guidance signals the official opening of Hong Kong’s stablecoin licensing application period. Institutions that are well-prepared and aim to secure early approval are expected to submit applications by September 30. HKMA Chief Executive Eddie Yue previously stated that in the initial phase, only a limited number of licenses will be granted, with the first batch likely restricted to just two or three.

Given the licensing thresholds, Hong Kong’s three note-issuing banks are considered prime candidates. Bank of China (Hong Kong), Standard Chartered Bank (Hong Kong), and HSBC currently issue banknotes in Hong Kong under a currency system backed by U.S. dollar reserves via a linked exchange rate mechanism. As stablecoins must be fully backed by fiat currency and held in custody by regulated institutions, banks are viewed as essential players in the ecosystem.

As of publication, no licenses have yet been issued. Under the current transitional policy, existing stablecoin issuers must apply for licenses within three months, or they will be required to wind down operations by November 1, 2025.

The criteria for license issuance are expected to prioritize use-case scenarios. Besides the three note-issuing banks, a range of other contenders—including Chinese banks, sandbox projects, central SOEs, and licensed internet platforms—have expressed interest in obtaining licenses. Regulatory discretion will likely emphasize practical applications, sustainability of operations, and institutional capacity.

According to industry participants, key application scenarios for stablecoins may include digital asset trading, cross-border payments in global trade, and the tokenization of traditional assets. For example, in Europe and the U.S., stablecoins have been widely used in financial activities such as ETF transfers, tokenized money market funds, and on-chain collateralized assets in decentralized finance.

Securities firms in Hong Kong are expected to tailor their stablecoin activities to align with their core business strengths. This includes facilitating transactions, financing, consulting, and digital asset allocation tied to tokenized assets. A senior Hong Kong brokerage representative emphasized the importance of acquiring virtual asset licenses to remain competitive in the evolving financial landscape.

In recent weeks, brokerages and financial institutions have begun exploring or entering the virtual asset sector, including preparations for license upgrades. As of the end of July, 44 financial institutions had successfully upgraded to the Type 1 license, with three new additions since June. Most of these entities are local Hong Kong securities firms, although some mainland Chinese brokerages have also upgraded, including Guotai Junan International, TF International, and Harfor Securities, a subsidiary of East Money Information (300059.SZ).

The Type 1 license upgrade is seen as a prerequisite for offering stablecoin trading and related virtual asset services. Brokers are expected to engage with a broader range of crypto assets, including Bitcoin, Ethereum, non-fungible tokens (NFTs), and security token offerings (STOs), with capabilities extending to custody and trading services.

In addition to Type 1, other relevant licenses include Type 4 and Type 9. By the end of July 2025, 39 institutions had secured Type 4 licenses for virtual asset investment advisory services, and 42 institutions held Type 9 licenses for asset management, including Bosera Asset Management (International) and China Asset Management (Hong Kong).

Zeng Yuchao, Managing Director of Futu Holdings, noted that Futu Securities upgraded its license in July last year, enabling eligible clients to begin trading digital currencies from August 2023.
While the global digital economy evolves, led by artificial intelligence and digital transformation, stablecoins may emerge as pivotal components in reshaping international monetary systems. Nevertheless, given the nascent nature of stablecoin business models, caution is advised against speculative hype and the resurgence of failed tokens. Attention must also be paid to the security of reserve asset oversight.

Institutional voices have expressed particular anticipation for a stablecoin pegged to offshore renminbi. Earlier this year, China Asset Management (Hong Kong) launched multiple tokenized funds, including the ChinaAMC RMB Digital Currency Fund. As the first on-chain offshore RMB money market fund, it has been viewed as a landmark development, signaling a new phase in exploring offshore RMB-denominated stablecoins.