Hong Kong is moving toward granting its first stablecoin licenses as early as March, advancing a tightly controlled digital-asset regime that regulators describe as pragmatic financial innovation rather than a retreat from China’s broader hostility to cryptocurrency activity.
Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), told the Legislative Council on Feb. 2 that the regulator was reviewing 36 applications from prospective stablecoin issuers and hoped to reach decisions next month. The update revives momentum behind a framework that had reportedly slowed after mainland regulators raised concerns late last year.
At stake is more than a licensing exercise. The rollout represents a strategic test of how far Hong Kong can develop blockchain-based financial infrastructure under the “one country, two systems” framework while Beijing maintains a strict prohibition on crypto trading and mining across the mainland.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab.
Stablecoins are digital tokens designed to maintain a stable value by pegging them to assets such as fiat currencies or gold. Unlike highly volatile cryptocurrencies, they are primarily used as settlement instruments — increasingly central to digital asset markets and cross-border payment flows.
Jordan Wain, policy advisory lead at Chainalysis, noted that stablecoins now account for more than half of the value of transactions recorded directly on public blockchains, underscoring their role as the plumbing of the crypto ecosystem.
Hong Kong’s Stablecoins Ordinance, passed in May and effective from August, requires licensing for any entity that issues stablecoins in the territory or pegs them to the Hong Kong dollar. The HKMA began accepting applications shortly after implementation.
The law’s design is deliberate. Rather than encouraging open-ended crypto experimentation, the framework places stablecoin issuance firmly within regulatory oversight. The HKMA has identified specific institutional use cases — including cross-border payments and tokenized deposit systems for international banks — as the primary areas of focus.
Tokenized deposits, in particular, reflect a convergence between traditional finance and blockchain rails. These are digital representations of regulated bank deposits issued on distributed ledgers but backed and supervised within the banking system. The model attempts to harness blockchain efficiency without stepping outside prudential safeguards.
Prospective issuers are already emphasizing efficiency gains. Payments technology firm Payment Cards Group has argued that Hong Kong dollar-backed stablecoins could support faster refunds, quicker cross-border settlements, and more transparent foreign exchange pricing. For a city that serves as a financial gateway between China and global markets, such use cases are commercially significant.
A geopolitical undercurrent
Hong Kong’s push is unfolding against heightened sensitivity over currency dominance and financial architecture.
Monique Taylor, an academic at the University of Helsinki, said Beijing’s concerns extend beyond illicit finance to questions of monetary control. Stablecoins, she said, challenge state oversight of money, payments, and capital flows — pillars of China’s state-centered financial governance model.
Particular anxiety surrounds dollar-backed stablecoins such as USDT and USDC. Taylor noted that Chinese policymakers recognize that widespread adoption of U.S. dollar-pegged tokens could entrench dollar primacy in digital markets, complicating efforts to elevate the renminbi’s global role.
China reinforced its stance last week when eight state regulators issued a joint statement reaffirming the ban on crypto activity, including unauthorized issuance of yuan-backed stablecoins.
Security risks also remain prominent in Beijing’s calculus. A recent report found that stablecoins were the primary instrument used by Chinese organized crime networks to transfer illicit funds, with as much as $44 million moving daily through sophisticated channels. Such findings reinforce the mainland’s long-standing argument that crypto markets introduce systemic and criminal vulnerabilities.
Washington is watching developments closely as well. U.S. Treasury Secretary Scott Bessent told the Senate Banking Committee that he “would not be surprised” if Hong Kong’s digital-asset push were interpreted as an attempt to build an “alternative to American financial leadership.” His remarks highlight how stablecoins have evolved from niche financial tools into instruments embedded in strategic financial competition.
A controlled experiment
Analysts describe Hong Kong’s licensing regime as a hedge rather than a pivot. There is little evidence that Beijing intends to reverse its 2021 blanket ban on cryptocurrency transactions. Instead, Hong Kong’s initiative appears structured as a contained experiment — one that allows policymakers in Beijing to observe market behavior without fully liberalizing crypto activity on the mainland.
Taylor characterized the rollout as limited and cautious. Licensing requirements, capital standards, compliance obligations, and supervisory oversight are likely to be stringent. The aim is to integrate stablecoins into existing financial channels rather than foster a parallel crypto economy.
Wain said Hong Kong is using its autonomy to demonstrate that stablecoins can be supervised responsibly while supporting payments innovation, tokenization, and broader Web3 ambitions. That clarity could appeal to overseas investors seeking regulated exposure to digital asset infrastructure in Asia.
Interest reportedly includes large mainland-linked technology firms such as Ant Group and JD.com. Their participation would signal institutional backing but also underscores why Beijing’s oversight remains decisive.
Economic calculus for Hong Kong
The stablecoin regime aligns with broader efforts to restore Hong Kong’s stature as a global financial center. The city has faced years of political upheaval, pandemic disruptions, and capital outflows. Developing a regulated digital-asset ecosystem offers a path to differentiate itself from mainland markets while reinforcing its intermediary role.
Stablecoins may also complement Hong Kong’s work on central bank digital currency (CBDC) initiatives and tokenized securities. The HKMA has explored digital bond issuance and cross-border settlement pilots, suggesting that stablecoins could become one component of a larger digital finance architecture.
Yet the boundaries are clear. Hong Kong is unlikely to permit an unregulated retail crypto surge. Authorities have already tightened rules around virtual asset trading platforms and retail access. The stablecoin regime fits within that cautious, compliance-driven posture.
The broader global context
Globally, stablecoin regulation is accelerating. The European Union’s Markets in Crypto-Assets (MiCA) framework is operational. Japan has established a regulated stablecoin regime. In the United States, lawmakers continue debating federal oversight. Financial institutions are experimenting with tokenized deposits and blockchain-based settlement networks.
Against that backdrop, Hong Kong’s March timeline carries symbolic weight. If licenses are issued, the city will join a small group of jurisdictions offering formal authorization for stablecoin issuers within a structured regulatory perimeter.
The experiment’s durability will hinge on several factors: the scale of issuance, cross-border uptake, compliance outcomes, and Beijing’s assessment of systemic risk. It will also test whether stablecoins can function as institutional infrastructure rather than speculative assets.
For now, the signal is calibrated. Hong Kong is moving forward — but within defined constraints. Beijing’s crypto ban remains intact. The stablecoin regime does not mark a reversal of mainland policy. Instead, it represents a measured attempt to explore digital monetary tools while preserving oversight, capital control, and financial stability.