Hong Kong Launches Stablecoin Licensing Regime to Boost Global Crypto Ambitions

Hong Kong officially launched its fiat-referenced stablecoin licensing regime on August 1, marking a significant step in its broader crypto policy reform and ambition to become a global crypto hub [1]. The Hong Kong Monetary Authority (HKMA) now requires all firms wishing to issue or market stablecoins to retail investors to obtain a license. The new regulations cover reserve asset management, client fund segregation, anti-money laundering measures, and compliance with fit-and-proper tests for operators.

The timing of the launch follows the U.S. passing the GENIUS Act, the first federal legislation on stablecoins, sparking global comparisons between regulatory approaches. Yat Siu of Animoca Brands highlighted that Hong Kong’s system, governed by a single regulator (HKMA), is more streamlined than the U.S. model, which involves multiple federal and state authorities [1].

Hong Kong’s regime allows for multi-currency support, offering a more flexible framework for international stablecoin projects. While both Hong Kong and the U.S. require 100% reserve backing for redemption stability, the former’s rules are already operational, giving it a potential advantage for global adoption.

Despite a competitive domestic payment environment with widespread use of Visa, Mastercard, AliPay, WeChat Pay, and Octopus Cards, local businesses are showing interest in stablecoins for international applications [1]. Andy K.T. Lau of David Cameron Law Office noted a growing trend among clients exploring stablecoins not just as speculative tools but as potential payment rails. He anticipates new applications in finance, retail, and small businesses, with collaboration between traditional financial institutions and digital platforms being key to adoption.

Edwin Cheung of Gate Dubai emphasized the enthusiasm from mainland Chinese firms in leveraging Hong Kong’s stablecoin framework, either through their own stablecoins or by integrating the technology into their payment systems. While China’s strict crypto regulations prevent domestic use, companies like JD.com and AliPay are exploring stablecoins for international operations [1].

Cheung also highlighted a travel company’s interest in using stablecoins to streamline cross-border payments, particularly from countries where local bank access is limited. He compared this potential growth to AliPay’s expansion into Hong Kong years ago, suggesting mass adoption could be driven by large firms that integrate stablecoins into their ecosystems.

However, some challenges remain. Airwallex has expressed skepticism about stablecoins’ ability to improve international transfers [1]. Additionally, the high capital requirement of HK$25 million for stablecoin issuers may hinder smaller innovators. Tiena Sekharan of Chavanette Advisors suggested introducing tiered capital requirements and a passporting mechanism to allow licensed firms from compliant jurisdictions to operate in Hong Kong with reduced regulatory hurdles [1].

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Source: [1] Hong Kong Kicks Off Stablecoin Licensing Regime With Eye on Global Hub (https://decrypt.co/333078/hong-kong-kicks-off-stablecoin-licensing-regime-with-eye-on-global-hub)