Bank of China Prepares to Apply for Stablecoin Issuer License Amid Growing Competition

Bank of China Hong Kong's shares surged 6.7% after reports revealed the state-owned lender is preparing to apply for a stablecoin issuer license in Hong Kong. The news has fueled speculation about a potential state-backed stablecoin rival to the digital yuan. Bank of China has formed a task force to study stablecoin issuance and is actively preparing materials to become a licensed issuer under Hong Kong's new regulatory framework.

Bank of China Hong Kong's shares surged 6.7% on Monday, trading at HKD$37.58, following reports that the state-owned lender is preparing to apply for a stablecoin issuer license under Hong Kong's new regulatory framework. The news has fueled speculation about a potential state-backed stablecoin rival to the digital yuan.

The Bank of China Hong Kong has formed a dedicated task force to study stablecoin issuance and is actively preparing materials to become a licensed issuer under the Hong Kong Monetary Authority's (HKMA) new rulebook. The bank's interest in stablecoins comes amidst a broader trend of major financial institutions exploring digital asset applications and their risk management.

Hong Kong introduced its stablecoin licensing regime on August 1, requiring issuers to secure approval from the HKMA. The framework imposes strict requirements on reserve management, redemption guarantees, client fund segregation, anti-money laundering, disclosure, and operator vetting. The rules came shortly after the U.S. passed its first federal stablecoin law, the GENIUS Act.

The city's regime has already attracted interest from major financial institutions, including Standard Chartered. Chinese tech giants JD.com and Ant Financial have also announced plans to seek licenses abroad for services targeting their international businesses, which could include applying in Hong Kong. The appeal of stablecoins lies in efficiency, with blockchain technology reducing settlement times and bypassing traditional intermediary fees of banks. Vincent Chok, CEO of Hong Kong-based First Digital, noted that the opportunity is "especially pronounced in emerging markets, where growing stablecoin adoption provides users a hedge against currency volatility."

While the cost advantage varies by corridor and transaction type, Chok noted that adoption is accelerating as regulation provides clarity. “The current trajectory suggests exponential growth in the next 2-5 years,” he added. Still, Hong Kong regulators have urged restraint. In mid-August, the Securities and Futures Commission (SFC) and the HKMA jointly warned investors that market swings tied to licensing rumours may be misleading.

The Bank of China's Hong Kong-listed shares rose by 6.7% on Monday, trading at HKD$37.58, after local media reports suggested that the bank’s Hong Kong unit is preparing to apply for a stablecoin issuer license. The Hong Kong Economic Journal reported that the Chinese state bank’s branch had formed a dedicated task force to explore stablecoin issuance. The Bank of China did not respond to a request for comment, but in last week’s results call it told investors it was researching digital asset applications and their risk management.

The development comes just weeks after Hong Kong’s Stablecoin Bill came into force on August 1, establishing one of the world’s first dedicated licensing regimes for fiat-referenced stablecoins. The HKMA began accepting expressions of interest on August 1 and has set September 30 as the deadline for formal applications. Officials confirmed they have already received inquiries from more than 40 companies, even before the August 1 regulation took effect. Major firms, including JD.com, Ant Group, Standard Chartered, and Circle, publicly stated application intentions, while law firms report managing consultations for additional candidates finalizing materials.

The growing competition has drawn heavy investor interest. Hong Kong regulators have cautioned against market volatility, noting that announcements about licensing intentions have already triggered sharp stock movements. On August 14, the HKMA and Securities and Futures Commission (SFC) issued a joint statement warning that expressions of interest do not guarantee approval. They stressed that licenses will only be granted to applicants that meet the framework’s high thresholds.

The ordinance’s rollout marks Hong Kong’s bid to position itself as a regulated hub for stablecoins at a time when global market capitalization in the sector has surged to a record $261 billion, after 22 consecutive months of growth. Regulators hope that tighter rules will reduce systemic risks while attracting major financial institutions. Analysts say the framework could encourage non-USD stablecoin alternatives in Asia, potentially challenging the dollar’s dominance in regional settlements.

Bank of China’s interest is especially significant given Beijing’s ongoing rollout of the digital yuan, its central bank digital currency (CBDC). While the digital yuan remains under the direct control of the People’s Bank of China, a licensed Bank of China stablecoin could provide a commercial, internationally accessible counterpart within a regulated framework. Some observers believe such a development could help China test the cross-border utility of a digital asset backed by state institutions.

The HKMA has said it will continue consultations on technical requirements and risk controls, and existing issuers are expected to transition into compliance over the coming months. For now, the Authority has not granted any licenses, and investors are urged to verify any issuer’s credentials through official channels. With Hong Kong pushing ahead, the stablecoin licensing race is intensifying across Asia.

References:
[1] https://www.lookonchain.com/feeds/27069
[2] https://decrypt.co/337495/bank-of-china-stock-jumps-amid-rumours-of-stablecoin-licensing-plans
[3] https://cryptonews.com/news/bank-of-china-stock-surges-6-7-on-shock-stablecoin-issuer-license-news-is-a-digital-yuan-rival-coming/