From sandbox to licensing, a comprehensive guide to Hong Kong’s upcoming stablecoin policy

· Non-compliant entities: Must cease operations within one month of receiving notice.

Requirements include: maintaining full reserves, processing redemptions within one day, establishing a physical presence in Hong Kong, maintaining financial resources, performing know-your-customer (KYC) and conducting transaction monitoring.

Violators face penalties including fines, suspension, or revocation of licenses. Hong Kong's latest policy stance on stablecoins With the Stablecoin Ordinance set to officially come into effect on August 1, 2025, the Hong Kong government and relevant agencies have been releasing policy signals regarding stablecoins on various occasions. These statements cover not only regulatory logic and licensing mechanisms, but also key issues such as pegged currencies, implementation scenarios, and risk management, gradually outlining the practical operational framework of Hong Kong's stablecoin regulatory system.

1. Stablecoins are not a tool for speculation, but financial infrastructure

In all public statements, one position has been repeatedly emphasized: Stablecoins should not be a tool for market speculation.

On July 20th, at the annual report release conference, Hong Kong Financial Services Development Council Chairman Hung Pi-cheng emphasized that stablecoins should play a stabilizing role, and that the digitalization of asset markets is a long-term endeavor that cannot be short-sighted. He also stated that while various assets will be tokenized in the future, this process will not be completed within 24 hours, and that the entire financial system should not be fully blockchained in the short term.

Financial Services and the Treasury Secretary Paul Chan has publicly reiterated similar views several times in recent months. He believes that stablecoins should be viewed as financial development tools that enhance financial efficiency, rather than as a means of generating wealth. On June 29th, he stated that the government will adhere to a clear regulatory approach and require issuers to have capital, reserve mechanisms, and redemption capabilities to prevent systemic risks and safeguard monetary sovereignty.

Financial Secretary Paul Chan Mo-po has also pointed out in several signed articles that stablecoins, with their programmable nature, can be used for payment automation and the restructuring of financial services processes, but their development should not be divorced from the needs of the real economy. He emphasized: "It's not simply a pursuit of technology, nor is it a revelry in tools."

Voices from central think tanks have also highlighted the broader context for stablecoins. On June 21st, Li Yang, Chairman of the National Finance and Development Laboratory, stated that stablecoins are essentially an on-chain extension of the US dollar and a tool for the United States to digitize its hegemony. China should seize this opportunity to promote the internationalization of the RMB and consider developing complementary mechanisms between RMB stablecoins and central bank digital currencies.

Second, the licensing system is tightened, and the application threshold is high

Hong Kong's stablecoin regulatory regime will adopt a high-standard review mechanism. On July 30, HKMA Deputy Chief Executive Chan Wai-min clarified at a technical briefing that the licensing threshold is "very high." In the initial phase, licenses will not be issued in large quantities at once, but will be assessed on a case-by-case basis based on the quality of the application materials. The first license is expected to be issued early next year.

Hong Kong Monetary Authority Chief Executive Eddie Yue previously wrote that the compliance requirements faced by stablecoin issuers are nearly identical to those faced by financial institutions such as e-wallets and banks. They will be subject to consistent oversight in asset reserve management, redemption policies, and anti-money laundering mechanisms. Initially, only a "small number of licenses" will be issued, with a focus on assessing the issuer's business plan, practical scenarios, reserve capacity, and technical security.

Hui Cheng-yu has repeatedly emphasized that issuers must complete redemptions "within one day" after a user initiates them, establish a stabilization mechanism and customer asset segregation mechanisms, and fully implement anti-money laundering and counter-terrorist financing regulations.

Third, cross-border settlement is the primary application scenario, followed by Web3

Compared to narratives emphasizing "on-chain" or "DeFi," the policy-level positioning of stablecoins has always been centered around cross-border payment and clearing systems.

Eric Yu stated that the first batch of stablecoins will primarily focus on cross-border trade settlement and Web3 scenario testing. He also emphasized that sandbox participation is not a prerequisite for licensing, and even if an institution has entered the testing scope, it does not necessarily guarantee a full license in the future.

Xu Zhengyu mentioned in the interview that stablecoins can serve as an alternative payment method to mitigate local currency fluctuations in the Belt and Road region, particularly in infrastructure projects, engineering contracting, and other scenarios with underdeveloped foreign exchange markets.

Paul Chan stated that Hong Kong will continue to promote the tokenization of financial assets, gradually introducing token settlement mechanisms in markets such as green bonds, ETFs, and metal commodities, and using stablecoins to bridge transaction currencies with on-chain assets.

Fourth, the fiat currency peg mechanism is open, but RMB stablecoins require careful consideration

Regarding the arrangement of pegged currencies, policymakers have clearly stated that Hong Kong's regulatory framework is designed to be open.

On July 30, Chen Weimin stated that applicants can choose to peg to a specific fiat currency or a basket of fiat currencies, simply by clearly declaring this at the time of application.

Previously, Xu Zhengyu has discussed the possibility of a "RMB stablecoin" on several occasions. He pointed out that pegging to the RMB is not legally prohibited, but if it involves exchange rate management and macroeconomic policies, communication and coordination with relevant mainland authorities are required. "Hong Kong has legal space, but if it is to be implemented, it must take into account the exchange rate and monetary policy of the entire country."

In his memoir, Paul Chan Mo-po also pointed out that allowing the use of different fiat currencies as anchor assets will help attract more international institutions to choose to issue stablecoins in Hong Kong based on their own specific application scenarios.

V. Cautionary Reminder for Investors and the Public

While promoting institutional development, several policymakers also offered sobering warnings regarding market enthusiasm.

Legislative Council member Ng Kit-chung stated that Hong Kong has ample room for the development of stablecoins, and will become a testing ground for the integration of finance and the real economy in the future. However, he specifically warned that retail investors should remain vigilant when it comes to emerging asset classes, avoid blindly following trends, and fully understand the product risks.

The HKMA has also issued a notice reminding the public to be wary of unauthorized stablecoin projects or individuals claiming to be "licensed" or "applying for a license," emphasizing that the public bears the associated risks if they hold unlicensed stablecoins.

How does the market view Hong Kong's stablecoin regulation? With the imminent implementation of Hong Kong's Stablecoin Ordinance, intensive market discussion has swirled around topics such as the pace of licensing, the path forward for specific scenarios, and the potential for a RMB anchor. Voices from securities firms, fund companies, foreign investment banks, and the media are gradually revealing the market's structural expectations and potential impact of this regulatory regime.

I. Licensing Pace and Expectations for the First Batch of Licensed Institutions

On July 30, CITIC Securities released a research report stating that the "Summary Explanation of the Licensing Regime for Stablecoin Issuers" will be the most valuable official document for reference during the current application phase. The report predicts that the number of the first batch of stablecoin licenses will be "only in the single digits," with issuance expected before the end of the year at the earliest. The HKMA encourages institutions to contact regulators by August 31st, with the formal application deadline being September 30th. The report recommends focusing on two key areas: issuers with a clear likelihood of obtaining a license; and platform companies that have confirmed their involvement in developing stablecoin use cases. Gan Tian, CEO of China Asset Management (Hong Kong), sees the current stage as a critical juncture where "basic rules have been established and pilot scenarios are ready to begin." He revealed that China Asset Management has participated in the Hong Kong stablecoin sandbox testing and is exploring integrated approaches for payment, subscription, redemption, and asset management. He believes that whoever can first achieve a closed loop of "compliance + implementation + asset connectivity" will likely become a leading force in the stablecoin market.

II. Regulatory Path and the "Dual Track" Concept for the Hong Kong Dollar and the Renminbi

July 23 On the 28th, Ping An Securities released a report stating that Hong Kong may develop a dual-track regulatory framework: "USD stablecoins connecting to international markets + HKD stablecoins connecting to mainland China." This will, on the one hand, continue to attract USD-dominated projects to Hong Kong; on the other hand, it will also reserve institutional space for the internationalization of the RMB.

The report notes that Hong Kong's definition of stablecoins is not limited to a specific type of fiat currency, and the market share of non-USD stablecoins may increase in the future. Currently, Hong Kong's stablecoin regulations include overseas projects that are "partially pegged to the Hong Kong dollar."

Xiao Feng (Chairman of HashKey Group) stated in an interview that Hong Kong's stablecoin licenses will not be limited to pegging to the Hong Kong dollar. The pegged currency and the public blockchain network deployed will be determined by the issuer. He mentioned that networks such as Ethereum and Solana could serve as infrastructure for stablecoin deployment in Hong Kong.

III. Policy Expectations and Financial Functions of the CNH Stablecoin

Since June, whether the offshore RMB stablecoin (CNH Stablecoin) will be piloted in Hong Kong has become a hot topic in the market. Morgan Stanley noted that Hong Kong's stablecoin regulations "pave the first legal path" for the CNH stablecoin. Backed by an offshore liquidity pool of approximately 1 trillion RMB, the CNH stablecoin can verify the feasibility of cross-border settlements without violating mainland capital controls and serve as a supplementary payment channel beyond CIPS and SWIFT. Morgan Stanley's Chief Economist for China, Xing Ziqiang, stated that Hong Kong should first promote stablecoins pegged to the US dollar and Hong Kong dollar to establish a foundation of technical and market trust, and then gradually introduce the CNH stablecoin to strengthen the RMB's position in the digital payment system. The Hong Kong Economic Journal wrote that Hong Kong could serve as a "pioneer in experimentation" to promote the implementation of the CNH stablecoin and address competition for international payment influence. However, this requires proper compliance with regulatory requirements such as anti-money laundering and counter-terrorist financing.

The Economic Observer commented that if the CNH stablecoin were piloted in Hong Kong, it would establish a RMB channel independent of the SWIFT system and open a new digital path for RMB internationalization. This exploration could become another institutional leap following the RMB cross-border settlement mechanism established in 2009.

Wang Yongli, former Vice President of the Bank of China, also stated in a statement that the United States has passed legislation to support the strategic development of a dollar-denominated stablecoin, and China should actively respond. Hong Kong's stablecoin regulatory system is at the forefront, and it has the practical conditions to pilot the CNH stablecoin, which can be used primarily for overseas crypto asset trading and clearing.

Fourth: Financial Market Impact and Capital Focus

In a June 3rd report, GF Securities noted that while the Hong Kong stablecoin draft is still in its early stages, it will create short-term structural investment opportunities, primarily in sectors such as digital currency, cross-border payments, blockchain, and RWA. The report suggests that if policies explicitly support RMB-pegged stablecoins, some A-share listed companies will benefit from the regulatory compliance benefits of the "Hong Kong Bridge."

However, GF Securities also noted that due to the current strict domestic regulation of virtual assets, the probability of large-scale incremental capital inflows remains low.

Ping An Securities further added that as global stablecoin regulation gradually takes shape, it is expected to promote the establishment of a unified international regulatory framework. China needs to seize this institutional window and explore a controllable path through Hong Kong to avoid being completely monopolized by dollar-denominated stablecoins in the digital asset sector.

Media outlets such as CCTV's "Yuyuan Tantian" and the Securities Times have also published commentaries, arguing that the US's promotion of the digital dollar through stablecoins is a new form of financial expansion. If China remains largely unaware of its stablecoin strategy, it may be forced to passively respond to the new dollar-dominated settlement network. Who is applying for a Hong Kong stablecoin license? With the Stablecoin Ordinance set to take effect on August 1, 2025, numerous companies are accelerating their entry into the market, preparing or announcing applications for stablecoin issuer licenses. These participants come from diverse industry backgrounds, including financial institutions, technology platforms, payment companies, and blockchain startups, reflecting the diverse responses to the implementation of Hong Kong's stablecoin regulatory regime.

I. Overall Market Enthusiasm

According to a report on July 14th, 50 to 60 companies are interested in applying for Hong Kong stablecoin licenses.

· Approximately half of these companies are payment institutions, and the other half are well-known internet companies;

· Most have Chinese capital backgrounds;

· It is expected that only 3–4 licenses will be issued in the first phase, and stablecoins will initially be pegged to the Hong Kong dollar and the US dollar.

II. List of Sandbox Pilot Institutions (Announced on July 18, 2024)

The following five institutions are participating in the stablecoin issuer sandbox testing:

1. JD CoinChain Technology (Hong Kong) Co., Ltd.

2. Yuanbi Innovation Technology Co., Ltd.

3. Standard Chartered Bank (Hong Kong) Limited

4. Anni Group Limited

5. Hong Kong Telecom (HKT) Limited

Third, Companies That Have Clearly Indicated They Will Apply for or Are In the Process of Applying for a License

· China 33 Media

On July 15th, the company announced plans to apply for a Hong Kong stablecoin license, with funding to come from a share placement and cash reserves.

· Tiansheng Capital

On July 11, it announced plans to establish a digital asset trading and foreign exchange settlement company and apply for a stablecoin license. It plans to use stablecoins for art transactions and foreign exchange settlement services, focusing on cross-border trade settlement.

· Duodian Digital Intelligence

On July 3, it announced that it is preparing to apply for a Hong Kong stablecoin license.

· Animoca Brands + Standard Chartered Bank (Hong Kong) + Hong Kong Telecom

They have publicly stated on multiple occasions that they will jointly establish a joint venture, apply for a license, and issue a Hong Kong dollar stablecoin. The stablecoin will be used for virtual asset trading in games, cross-border trade, and financial settlement.

· JD.com

Has publicly announced that it will issue a stablecoin pegged 1:1 to the Hong Kong dollar in Hong Kong. The issuer is JD CoinChain Technology (Hong Kong), which has also been selected as a participant in the Hong Kong Monetary Authority's stablecoin "sandbox." Ant International According to sources familiar with the matter, the company will apply for an issuer license immediately after the Hong Kong Stablecoin Ordinance takes effect. It also plans to seek licenses in Singapore and Luxembourg. LianLian Digital According to sources familiar with the matter, LianLian Digital is actively exploring the application for stablecoin licenses in Hong Kong and Singapore. Its subsidiary, DFX Labs, already holds a virtual asset trading platform license issued by the Hong Kong Securities and Futures Commission.

Fourth, Companies Researching, Analyzing, or Planning Related Businesses

· Ping An of China

July 21 On the same day, the company responded on an interactive platform that it has been monitoring changes in Hong Kong's stablecoin regulation and is closely monitoring and actively researching them.

· Sanwei Xinan

On June 30th, the company stated that it has participated in virtual currency and stablecoin-related businesses in Hong Kong and, as a cryptographic infrastructure provider, will provide security for related projects.

V. Clarifications

· Octopus

It was previously rumored that it participated in the stablecoin accelerator program. The company subsequently clarified that it was only participating in the exploratory program led by Brinc in an "advisory capacity," focusing on conceptual research and not on stablecoin product development or formal collaboration.