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Hong Kong's Stablecoin Licensing: A Victory for Conservatism or a Marathon of Financial Innovation

(Authorized reprint by author Sam Hui)


Earlier this month, the Hong Kong Monetary Authority (HKMA) finally announced the recipients of Hong Kong's stablecoin licenses. Out of 36 applicants, only HSBC and Anchorpoint HK—a joint venture formed by Standard Chartered, HKT, and Animoca Brands—ultimately stood out. The initial approval rate was merely around 5%. The reaction from the Web3 community was quite calm, as this outcome was largely expected. This is not only a major regulatory test but also a comprehensive health check of Hong Kong's financial DNA.


The World's Strictest Regulatory Framework: Building a Profound Defense Line

Before labeling Hong Kong with "conservatism," we must first clarify the design logic behind these licenses. The regulatory framework established by the HKMA for compliant stablecoins is arguably the strictest in the world.

Regarding reserve assets, issuers must back every stablecoin with equivalent highly liquid assets, strictly limited to cash, bank deposits with maturities of less than three months, or government bonds with maturities of less than one year. Equities, corporate bonds, and crypto assets are entirely excluded. These assets must be denominated in the issuance currency, independently held by licensed banks or recognized custodians, and strictly segregated from the issuer's own funds. Token holders enjoy priority claim rights in the event of the issuer's bankruptcy. Redemption requests must be processed within one business day, and issuers cannot refuse or impose unreasonable conditions. Furthermore, issuers must prepare daily reserve statements, submit them to the HKMA weekly, and have an independent external auditor issue a certification report for public disclosure monthly.



The most critical bottom line is that licensees are prohibited from paying any interest to stablecoin holders. This forcefully blocks the path of "stablecoin wealth management," locking it strictly into its fundamental role as a payment tool. Algorithmic stablecoins and unbacked stablecoins are outright banned. Additionally, the issuer's paid-up share capital must be no less than HKD 25 million, they must maintain sufficient liquidity, and they must establish KYC (Know Your Customer) and AML (Anti-Money Laundering) systems as rigorous as those of traditional banks.


These provisions mean that issuing a stablecoin becomes a pure cost endeavor. Rather than merely issuing licenses, this is a strategic layout targeting financial infrastructure.



36 to 2: Why "Old Money" Instead of "New Blood"?

Looking at the shortlist of 2 from 36, the HKMA's screening logic is exceptionally clear: priority is given to note-issuing banks. If HSBC had not applied, Standard Chartered might have been the only one on the e-HKD track. For an institution with over 160 years of history that views being a "note-issuing bank" as a core brand asset, such a symbolic absence would be unbearable. For Standard Chartered, proactively applying and entering the fray via a joint venture entity is also a strategic lock-in.

During the approval process, the HKMA repeatedly asked applicants: "Why do you want to issue your own instead of using someone else's?" The essence of this question was an early signal—profitability is not the primary consideration; the core issue is whether they are willing to build and run this infrastructure for Hong Kong. Ultimately, those who remained were institutions that view stablecoins as strategic infrastructure rather than short-term arbitrage tools.

This is not a suppression of innovation, but an extremely prudent safeguard mechanism—what Hong Kong wants is not temporary hype, but something controllable, usable, and sustainable. If a regional industry standard can ultimately be achieved, it will greatly elevate Hong Kong's position in global financial technology.

 


Stagnation of Financial Innovation? A Proposition Worth Pondering

Regarding the judgment of "stagnation of financial innovation," the author believes it is open to debate. Nominally, Hong Kong has opened the door to Web3, but on the most critical right to issue coins, the initiative remains firmly in the hands of traditional finance.

First, traditional financial institutions lack the intrinsic motivation to promote stablecoins. Unlike crypto-native players, the core business of note-issuing banks lies in traditional deposits and loans; the marginal benefits of stablecoins to them are relatively limited, and there is even a chance it could cannibalize their core business. Second, mainland regulators have been issuing "gentle reminders" to enterprises like Ant Group and JD.com since last year, asking them to stop applying for related licenses. The central government's concerns about stablecoins potentially affecting the sovereignty of monetary policy and economic operations have objectively exacerbated market constraints.

The real risk lies in the fact that a stablecoin lacking application scenarios will ultimately be reduced to an empty concept. If stablecoins are limited to crypto-to-crypto conversions and short-term speculation on trading platforms, the institutional significance of Hong Kong's licensing will be greatly diminished. Conversely, if they can be embedded into payment, clearing, and asset trading infrastructure, what Hong Kong is striving for is not just temporary heat, but an actual position in the next-generation financial network. The author has always believed that digital currency is inevitable; it is the natural evolution of currency iteration.


 

A Carefully Designed "Overt Scheme": Understanding Hong Kong's Deep Strategy

There are market commentaries claiming that the HKMA's selection process is more like a deliberately designed "overt scheme" (yangmou). On a deeper level, what the Hong Kong government is truly vying for is the sovereignty of next-generation financial clearing. Against the backdrop of the politicization of the US dollar system and intensifying geopolitical conflicts, stablecoins may merely be a tool; behind them lies a grand chess game of clearing infrastructure led by Hong Kong.


 

Seeking Progress While Maintaining Stability to Achieve Long-Term Success

A victory for conservatism is not necessarily a trap for innovation. Prioritizing stability and preventing the outbreak of systemic risks is precisely the most fundamental protection for the financial ecosystem. In the starting phase, it is far wiser to be a bit slower and stricter than to face a collapse due to a loss of control in the future.

The key lies in what happens after licensing. Hong Kong's next step is not about who gets the license first, but who can truly put stablecoins to use and make them run. Cross-border payments, tokenized assets, supply chain finance... these real-world scenarios are the decisive factors for future competition. The author has sufficient confidence in Hong Kong's financial regulation; this is not a sprint, but a marathon testing endurance, determination, and long-term strategic vision.


Source:

[Ming Pao Daily News]

"Sam Hui: Hong Kong's Stablecoin Licensing: A Victory for Conservatism or a Marathon of Financial Innovation?"



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