The battle for stablecoin licenses in Hong Kong has begun! Banks like Bank of China and Standard Chartered are vying for the first approval. Who will be the first to get approved?

With the Hong Kong "Stablecoin Regulation" officially coming into effect on August 1, Hong Kong is entering a substantive stage in the regulation of virtual assets. The Hong Kong Monetary Authority has issued the "Regulatory Guidelines for Licensed Stablecoin Issuers," which clarifies the various thresholds for issuer license applications. Against this backdrop, issuers such as Bank of China (Hong Kong) and Standard Chartered Bank (Hong Kong) are expected to be the first to apply for and obtain stablecoin issuer licenses. In addition, Chinese-funded banks, sandbox testing enterprises, large central enterprises, and major internet companies are also actively preparing to apply. This indicates that Hong Kong will become an important player in the global stablecoin market.

1. Hong Kong's stablecoin license application: Issuers and Chinese giants lead the way

According to reports from Chinese media, the Hong Kong Monetary Authority has issued the "Regulatory Guidelines for Licensed Stablecoin Issuers", clarifying the various thresholds for issuer license applications. Banks such as Bank of China (Hong Kong) and Standard Chartered Bank (Hong Kong) are expected to be the first to apply for and obtain stablecoin issuer licenses. As issuing banks in Hong Kong, these two banks have a natural advantage in financial regulation and compliance, and their participation will bring greater credibility to Hong Kong's stablecoin market.

In addition, Chinese banks, sandbox testing companies, large central state-owned enterprises, and major internet companies are also actively preparing to apply. Brokerage firms will initially provide services such as stablecoin trading, custodial services, and financing. As of the end of July, 44 financial institutions have upgraded to the No. 1 securities trading license, indicating the active layout of Hong Kong's financial industry in the virtual asset sector.

II. Key Points of Regulatory Guidelines: Emphasizing Compliance and Risk Prevention

According to the Hong Kong Monetary Authority's "Stablecoin Regulation" guidelines for licensed stablecoin issuers, the HKMA requires licensed stablecoin issuers to "ensure that they do not issue or offer specified stablecoins in jurisdictions where trading specified stablecoins is prohibited," and that "licensees should implement control measures to mitigate the risks of remote customer identity verification processes, as well as location concealment that may occur during daily operations (e.g., using virtual means)." This indicates that while promoting the development of stablecoins, Hong Kong places great importance on the risks of anti-money laundering (AML) and combating the financing of terrorism (CFT).

Song Ke, the Executive Vice President of the Shenzhen Research Institute of Renmin University of China, stated that Hong Kong's "Stablecoin Ordinance" is the world's first comprehensive regulatory framework for fiat stablecoins. Globally, this ordinance has a demonstration effect on the formulation of stablecoin policies. In his view, after the implementation of the "Stablecoin Ordinance," relevant institutions will be able to quickly transform the pilot experiences accumulated in the early stages into actual products, accelerating the formation of the stablecoin ecosystem in the Hong Kong region of China. Furthermore, by promoting the digital yuan and Hong Kong dollar stablecoins, reliance on the U.S. dollar clearing and settlement system can be gradually reduced.

3. Market Challenges: OTC Exchange Shops and Regulatory Blind Spots

The Hong Kong "Stablecoin Regulation" will officially take effect on August 1, prohibiting unlicensed entities from operating stablecoin businesses in the region. However, a survey by the Hong Kong Economic Journal found that several street cryptocurrency exchange shops (OTC) are still operating normally, with some staff indicating they have not yet received any notifications regarding business changes. Currently, the exchange shops' conversion of USDT, USDC, and other stablecoins remains a regulatory blind spot, and they may need to apply for special licenses in the future. Legislative Council member Kwok Ka-ki stated that after the regulation comes into effect, it will be illegal for unlicensed platforms to sell USDT and USDC to retail investors, and existing stablecoins can be traded on licensed platforms. The Hong Kong SAR government is conducting a public consultation on the licensing system for over-the-counter trading services, which will end on August 29. This indicates that there are still challenges and gray areas in the process of comprehensively regulating stablecoins.

Conclusion:

The implementation of the "Stablecoin Ordinance" in Hong Kong brings a clear regulatory framework to the stablecoin market. The active participation of issuing banks and major Chinese companies indicates that Hong Kong will become an important player in the global stablecoin market. However, while promoting the development of stablecoins, how to effectively regulate gray areas such as OTC exchange shops will be an important issue facing Hong Kong.