HKMA Halts Stablecoin Licenses Until 2025 Citing Heavy Vetting and Stringent Requirements

The Hong Kong Monetary Authority (HKMA) has announced a temporary halt on issuing stablecoin licenses until early 2025, despite the formal implementation of its regulatory framework on August 1, 2025. This decision, framed as a strategic pause rather than a permanent restriction, underscores the authority’s commitment to a rigorous, risk-averse approach to stablecoin adoption. The HKMA emphasized that the freeze is driven by the “heavy workload” of vetting applicants against stringent requirements, including reserve transparency, anti-money laundering (AML) compliance, and capital adequacy standards. Deputy CEO Darryl Chan Wai-man noted that approvals, if any, would likely be limited to a small number of issuers meeting these criteria [1].

Under the new rules, prospective stablecoin issuers must submit preliminary intent forms by August 31 for feedback and complete applications by September 30 to be considered. Existing providers face a transition period to align with the updated regime, which enforces operational transparency and prohibits misleading claims about licensing status. Violations of the Stablecoins Ordinance could trigger penalties, adding urgency to the licensing process. However, the HKMA’s phased approach has created a bottleneck, with Chan cautioning that “explosive growth” in the stablecoin sector is unlikely in the near term [2].

The regulatory framework, outlined in two core guidelines, mandates licensed issuers to maintain transparent reserves and robust AML protocols. It also establishes supervisory benchmarks for operational resilience, including monthly reporting and capital adequacy requirements. The HKMA’s consultation documents, published July 23, 2025, detail these expectations, emphasizing alignment with global efforts to combat financial crime [3].

The freeze has drawn mixed reactions. Critics argue the delay risks stifling innovation in a competitive global market, particularly as the U.S. GENIUS Act—signed by President Trump on July 18—prioritizes rapid approvals for stablecoin issuers under a federal framework. The U.S. model mandates 100% reserve backing and monthly transparency reports but explicitly aims to “move LIGHTNING FAST” to dominate digital asset innovation [4]. In contrast, Hong Kong’s deliberate approach prioritizes stability, with analysts noting that the delay could deter short-term liquidity but mitigate systemic risks in the evolving stablecoin landscape [5].

While the U.S. strategy emphasizes speed and scalability, Hong Kong’s focus on selective licensing reflects a broader commitment to financial prudence. Both regimes share common ground in consumer protection, banning deceptive marketing practices. However, the absence of immediate licenses in Hong Kong has raised concerns about liquidity constraints for early applicants and potential regulatory fragmentation if international standards remain unaligned [6].

As the August 1 deadline approaches, stakeholders await further clarity on implementation timelines. The HKMA’s emphasis on rigorous scrutiny suggests a long-term vision of fostering trust in Hong Kong’s financial infrastructure, albeit at the cost of short-term momentum. The regulatory clarity, if effectively executed, may still attract investment by reinforcing the region’s reputation for stability.

Source:

[1] https://crypto.news/hong-kong-freezes-stablecoin-licensing-through-2025-as-rules-take-effect/

[2] https://www.thestandard.com.hk/market/article/307793/No-stablecoin-license-is-expected-to-be-granted-this-year-HKMA-says

[3] https://gbcode.rthk.hk/TuniS/news.rthk.hk/rthk/en/component/k2/1815690-20250729.htm

[4] https://www.paulweiss.com/insights/client-memos/genius-act-ushers-in-comprehensive-federal-regulation-of-payment-stablecoins

[5] https://www.hoganlovells.com/en/publications/the-payments-newsletter-including-digital-assets-blockchain-july-2025

[6] https://m.economictimes.com/crypto-news-today-live-29-jul-2025/liveblog/122959972.cms