- The HKMA expects to approve fewer than 10 licenses in the initial round.
- Most of the firms currently in talks with the HKMA are exploring stablecoins pegged to either the Hong Kong dollar or U.S. dollar.
Hong Kong’s licensing regime for stablecoin issuers came into effect on Friday, marking the latest step in the city’s plan to regulate digital assets. Firms can now apply for licenses under a law passed in May, but the Hong Kong Monetary Authority (HKMA) expects to approve fewer than 10 in the first round.
According to HKMA guidance, interested firms must engage with the regulator before August 31 and submit licence applications by September 30. Applicants will be allowed to operate while under review until January 31, 2026.
Around 40 companies had shown interest in applying for a licence, but HKMA Chief Executive Eddie Yue warned in July that the market had become “overly excited.” Deputy CEO Darryl Chan said that only “a handful” of licences will be granted initially.
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No licences Issued Yet; The Regulator Warns
No licences had been issued as of Tuesday, and the HKMA urged market participants to avoid public statements that could create unrealistic expectations. “We remind applicants to exercise due caution in their communications,” the regulator said.
“The HKMA reminds market participants to exercise caution when communicating publicly and avoid making statements that could be misunderstood or create unrealistic expectations. Under the Stablecoin Ordinance, it is illegal to falsely claim to be a licensee or applicant,” the regulator mentioned.
Most firms speaking with the HKMA so far are exploring Hong Kong dollar- or U.S. dollar-pegged stablecoins. Chan added that issuers of offshore yuan-backed stablecoins must clearly specify their intended use and reserve assets.
The stablecoin licensing framework follows Hong Kong’s 2023 consultation on digital asset regulation. The city aims to establish itself as a digital asset hub in Southeast Asia. Crypto-related stocks have rallied since the stablecoin law passed in May.
