Hong Kong will implement a formal licensing system for stablecoin issuers starting in August. The move reflects a determination to enhance the credibility of the digital asset industry based on a clear regulatory framework and strengthen its position as a global financial hub. Ahead of the system's implementation, major global stablecoin companies such as Tether and Circle are accelerating their preparations to enter Hong Kong and apply for licenses.
The key feature of this system is to require financial authorities' approval for stablecoin issuance and circulation, and impose strict requirements including 1:1 reserve maintenance, external audits, and regular disclosures. Particularly, the emphasis is on thoroughly verifying the transparency and stability of the mechanism for maintaining value pegged to legal tender to strengthen investor protection. Consequently, it is expected to facilitate the integration of the global stablecoin market, which previously operated in regulatory blind spots, into the regulatory system.
Global companies are also responding quickly. Tether, which holds the top market share in the stablecoin market, is reviewing the establishment of a dedicated legal entity in Hong Kong, and Circle from the United States has also identified Hong Kong as a key strategic hub in Asia. Amid competition with other Asian financial centers like Japan, Singapore, and Dubai, Hong Kong aims to secure a competitive advantage by leveraging a more clear and internationally compliant regulatory environment.
Experts are focusing on the potential impact of this policy on Hong Kong's financial industry. A professor from the Hong Kong Chinese University's Department of Finance noted, "As the stablecoin market, which previously had significant and uncertain regulatory risks, becomes institutionalized, a foundation will be created for institutional investors to participate," and "There is a high possibility that Hong Kong will establish itself as a neutral platform driving digital financial innovation between the US and China."
However, concerns exist about the intensity and pace of regulation. Some industry representatives pointed out, "If the regulatory level is excessively strict, it could hinder innovation and make market entry difficult for small-scale issuers," and suggested that "flexible implementation and continuous improvement are necessary."
Hong Kong authorities stated, "The stablecoin regulation is the first step towards the healthy development of the digital asset market," and "We will also explore ways to coexist with central bank digital currencies (CBDC) such as the digital yuan in the future."
Attention is focused on whether Hong Kong's licensing system will become a standard for the global stablecoin market and what changes it will bring to competition among Asian financial centers.
