Hong Kong Set to Issue First Stablecoin Licenses in March, Regulator Confirms Limited Initial Approvals
HONG KONG – The Hong Kong Monetary Authority (HKMA) is targeting March to issue the city's first licenses for stablecoin issuers, Chief Executive Eddie Yue confirmed to legislators on Monday. The initial approvals will be limited to a "very small number" of applicants, marking a pivotal step in formalizing Hong Kong's digital currency landscape.
The licensing regime, established under the Stablecoins Ordinance that took effect in August 2025, shifts the sector from a consultation and sandbox phase to a supervised market. Approved issuers will be authorized to operate at scale, provided they meet strict criteria around use-case viability, financial risk management, anti-money laundering (AML) safeguards, and reserve backing models.
"The assessment is rigorous and holistic," Yue stated, emphasizing that the regulator's review prioritizes real-world utility and systemic stability. He added that licensed issuers must comply with Hong Kong's cross-border transaction rules and hinted at future discussions on mutual recognition arrangements with other jurisdictions.
Industry observers note that this cautious, phased approach aims to prevent market fragmentation and build early trust in a sector where credibility hinges on redemption guarantees and reserve transparency. A limited first cohort could quickly shape market structure, as banks and payment partners are likely to favor integrating with licensed entities.
While the HKMA has not disclosed application numbers, earlier reports indicated interest from major players. Ant International had signaled plans to apply, and a joint venture involving Standard Chartered's Hong Kong unit, Animoca Brands, and telecom operator HKT was formed to seek a license for a Hong Kong dollar-pegged stablecoin.
The move positions Hong Kong alongside global financial hubs seeking to regulate stablecoins—digital tokens typically pegged to assets like the US dollar—amid growing attention from policymakers concerned about financial stability and investor protection. Analysts say the key post-license questions will revolve around issuance concentration, practical cross-border handling, and whether licensing drives adoption through traditional financial channels.
Market Reaction & Expert Commentary
Dr. Evelyn Tan, Fintech Professor at Hong Kong University: "This is a measured, necessary step. By starting with a small group, the HKMA can monitor real-world impact while signaling seriousness about compliance. It balances innovation with the need for robust safeguards."
Rajiv Mehta, Digital Assets Strategist at Ascent Capital: "The 'very small number' phrase is telling. It suggests the bar is extremely high, which may benefit established institutions with deep compliance resources over smaller startups. Long-term, this could influence where liquidity and partnerships consolidate."
Michael Foster, independent blockchain consultant: "More bureaucracy dressed as progress. By limiting licenses so severely, they're stifling competition and handing the market to a few insiders on a silver platter. This isn't building a vibrant ecosystem; it's creating a regulated cartel from day one."
Li Wen, CFO of a Hong Kong-based payments startup: "We welcome the clarity. Having a licensed framework helps legitimate businesses plan and invest. The cross-border recognition point is crucial—without it, Hong Kong's model risks being isolated."