HKMA Launches Selective Stablecoin Licensing Regime with Four Initial Licenses

Hong Kong’s regulatory authority, the Hong Kong Monetary Authority (HKMA), has announced that it will initially issue stablecoin licenses to no more than four firms, marking the start of a highly controlled and selective licensing regime under the new Stablecoins Ordinance (Cap. 656), which came into effect on 1 August 2025. This move reflects a cautious and methodical approach to integrating stablecoins into the broader financial system, emphasizing compliance, stability, and risk mitigation [1].

Under the new regulatory framework, only licensed institutions are authorized to issue or distribute fiat-backed stablecoins. The HKMA has set a high bar for entry, with stringent operational and compliance requirements, including full backing of stablecoins with reserve assets, adherence to anti-money laundering (AML) and counter-terrorist financing (CFT) standards, and enhanced due diligence in customer wallet management and secondary market monitoring [2]. These conditions suggest that the licensing process will favor larger, well-capitalized firms with established operational frameworks, potentially sidelining smaller or less mature players [3].

The limited number of initial licenses is expected to shape the competitive landscape of Hong Kong’s stablecoin market. Applications are being distributed on an invitation-only basis, with no public access to application forms. This selective process is designed to ensure that only the most prepared and compliant entities enter the market, aligning with the HKMA’s broader goal of fostering a “healthy and sustainable” development path for the industry [4].

Industry observers note that this strategy mirrors regulatory approaches in Japan and Singapore, where similar frameworks led to market consolidation and increased dominance by major players. The outcome in Hong Kong may follow a similar trajectory, with the potential for greater investor confidence stemming from a more stable and regulated ecosystem [5].

A transitional period has been introduced for existing stablecoin issuers who have not yet been invited to apply for a license. These entities may continue operating for three months from the enactment date, but all unlicensed distributors are prohibited from offering stablecoin products after 31 July 2025 unless they qualify for an exemption [6]. The HKMA also plans to issue further guidance on key definitions and enforcement mechanisms, signaling the possibility of continued regulatory refinement.

This regulatory shift underscores Hong Kong’s broader commitment to balancing innovation with financial stability. While the licensing bottleneck may slow short-term growth, it is expected to enhance market trust and create a more structured environment for cross-border digital payment innovations. As the market adapts to these new rules, the limited number of initial licenses will likely play a pivotal role in shaping the competitive dynamics and long-term evolution of the stablecoin industry in the region.

Source:

[1] MEXC. Hong Kong's Stablecoin Bill Takes Effect, Licensing Regime Now in Force. https://www.mexc.com/news/hong-kongs-stablecoin-bill-takes-effect-licensing-regime-now-in-force/63393

[2] Binance. From the US to Hong Kong, Stablecoin Regulation Enters New Phase. https://www.binance.com/en/square/post/27760530277825

[3] Lexology. Hong Kong Releases 'Stablecoins Ordinance' Establishing a Licensing Regime for Fiat-Referenced Stablecoin. https://www.lexology.com/library/detail.aspx?g=b82fca1c-2234-4d8a-a6c3-b94fa2ad4a08

[4] Tekedia. Hong Kong Releases 'Stablecoins Ordinance' Establishing a Licensing Regime for Fiat-Referenced Stablecoin. https://www.tekedia.com/hong-kong-releases-stablecoins-ordinance-establishing-a-licensing-regime-for-fiat-referenced-stablecoin/?srsltid=AfmBOoq6RN4ckYB3hljHMD6f_KPdP6XC-FxEXX1B2yoljUgTq0NHL4mv

[5] 富途牛牛. The Detailed Regulations for Stablecoin Issuance in the Hong Kong. https://news.futunn.com/en/post/59888759/the-detailed-regulations-for-stablecoin-issuance-in-the-hong-kong