Hong Kong’s Stablecoin Wins Licenses, but Not Market Success

Hong Kong’s stablecoin entered a new phase on Apr.10, 2026, when the city’s first batch of licenses finally arrived.

The Hong Kong Monetary Authority selected only two issuers, HSBC and Anchorpoint Financial, the Standard Chartered-HKT-Animoca joint venture, from the 36 applicants.

The long-awaited rollout was the centrepiece of the city’s race to turn digital assets from a speculative sideshow into a regulated part of its financial future.

However, for long-term observers of Hong Kong’s ambitions to position itself as a world-leading digital asset hub, the conservative approval list tells more than just the licenses themselves.

The first winners came from established financial institutions, suggesting that, when Hong Kong finally opened the door, the cautious, traditional system’s institutional preferences remained firmly in place.

“We believe this signals that the regulator will take a conservative approach, with banks, rather than less-regulated types of players, in the forefront of this market development,” said S&P Global Ratings in a research note.

The scene also brought a harder question back into focus.

Hong Kong passed its domestic stablecoin ordinance in May, which came into force on August 1, 2025, setting strict requirements for license holders on capital, reserves, and redemption, making clear that Hong Kong prioritised trust and control over speed.

But regulatory architecture alone won’t create demand. For a city with one of the world’s most tightly controlled stablecoin regimes, who would be the real users of Hong Kong dollar stablecoins, and why?

The answer runs into two stubborn realities: a domestic payments system that already works, and a global digital asset market that the US dollar already owns.

Hong Kong’s stablecoin entered a new phase on Apr.10, 2026, when the city’s first batch of licenses finally arrived.

The Hong Kong Monetary Authority selected only two issuers, HSBC and Anchorpoint Financial, the Standard Chartered-HKT-Animoca joint venture, from the 36 applicants.

The long-awaited rollout was the centrepiece of the city’s race to turn digital assets from a speculative sideshow into a regulated part of its financial future.

However, for long-term observers of Hong Kong’s ambitions to position itself as a world-leading digital asset hub, the conservative approval list tells more than just the licenses themselves.

The first winners came from established financial institutions, suggesting that, when Hong Kong finally opened the door, the cautious, traditional system’s institutional preferences remained firmly in place.

“We believe this signals that the regulator will take a conservative approach, with banks, rather than less-regulated types of players, in the forefront of this market development,” said S&P Global Ratings in a research note.

The scene also brought a harder question back into focus.

Hong Kong passed its domestic stablecoin ordinance in May, which came into force on August 1, 2025, setting strict requirements for license holders on capital, reserves, and redemption, making clear that Hong Kong prioritised trust and control over speed.

But regulatory architecture alone won’t create demand. For a city with one of the world’s most tightly controlled stablecoin regimes, who would be the real users of Hong Kong dollar stablecoins, and why?

The answer runs into two stubborn realities: a domestic payments system that already works, and a global digital asset market that the US dollar already owns.

Johnny Ng Kit-chong, a Hong Kong lawmaker and a prominent voice in the city’s digital asset policymaking, said the regulations are robust and comprehensive when asked about whether the stablecoin ordinance would limit the city’s stablecoin development in a Zoom call.

“It (the ordinance) is suitable for Hong Kong, and also for the market,” Ng said. “It is also well accepted by the industry players because we have 36 applicants running in the industry.”

However, for those who stayed in, the experience showed that Hong Kong was not building a flexible crypto framework but was instead transplanting traditional finance onto the blockchain.

Tim Sun, a senior researcher at Hashkey, said over the phone that the industry’s main complaint is exactly that.

“Hong Kong has extended the traditional financial regulatory logic to stablecoins,” he said. “Objectively, this will limit high-speed growth. Some exchanges and issuers have simply moved to Dubai, where conditions are more relaxed.”

Justin D’anethan, the head of partnerships at the crypto investment specialist firm Arctic Digital, argued that stablecoins should be a flexible payment method, but the city’s framework made it “heavy and clunky” in a WhatsApp call.

“A lot of people in Hong Kong, especially for the regulator, think it needs to be a big thing,” D’anethan said. “They have the banking mentality where they need the right compliance thing, the right legal team, the product and the branding and so on.”

Beijing’s stance is more nuanced than simple opposition.

Last November, the People’s Bank of China reaffirmed its ban on virtual currencies on the Chinese mainland, but left Hong Kong’s experiment untouched, with tolerance rather than endorsement.

Sun argued that although Beijing’s regulations are getting stricter, it’s great to open a window for Hong Kong as a sandbox.

“One of the most important factors is that Hong Kong is under the control of the central government, which means Hong Kong’s framework has already aligned with Beijing,” he said. “Under the framework of ‘One country, two systems’ and Hong Kong’s status as a free financial zone, we still have much flexibility to test on the ground.”

D’anethan shared a similar reading: “I do think the Hong Kong regulation is totally dependent on the green lights and the go-ahead of Beijing, but I actually think that Beijing is probably supportive of testing things in Hong Kong.”

Johnny Ng Kit-chong, a Hong Kong lawmaker and a prominent voice in the city’s digital asset policymaking, said the regulations are robust and comprehensive when asked about whether the stablecoin ordinance would limit the city’s stablecoin development in a Zoom call.

“It (the ordinance) is suitable for Hong Kong, and also for the market,” Ng said. “It is also well accepted by the industry players because we have 36 applicants running in the industry.”

However, for those who stayed in, the experience showed that Hong Kong was not building a flexible crypto framework but was instead transplanting traditional finance onto the blockchain.

Tim Sun, a senior researcher at Hashkey, said over the phone that the industry’s main complaint is exactly that.

“Hong Kong has extended the traditional financial regulatory logic to stablecoins,” he said. “Objectively, this will limit high-speed growth. Some exchanges and issuers have simply moved to Dubai, where conditions are more relaxed.”

Justin D’anethan, the head of partnerships at the crypto investment specialist firm Arctic Digital, argued that stablecoins should be a flexible payment method, but the city’s framework made it “heavy and clunky” in a WhatsApp call.

“A lot of people in Hong Kong, especially for the regulator, think it needs to be a big thing,” D’anethan said. “They have the banking mentality where they need the right compliance thing, the right legal team, the product and the branding and so on.”

Beijing’s stance is more nuanced than simple opposition.

Last November, the People’s Bank of China reaffirmed its ban on virtual currencies on the Chinese mainland, but left Hong Kong’s experiment untouched, with tolerance rather than endorsement.

Sun argued that although Beijing’s regulations are getting stricter, it’s great to open a window for Hong Kong as a sandbox.

“One of the most important factors is that Hong Kong is under the control of the central government, which means Hong Kong’s framework has already aligned with Beijing,” he said. “Under the framework of ‘One country, two systems’ and Hong Kong’s status as a free financial zone, we still have much flexibility to test on the ground.”

D’anethan shared a similar reading: “I do think the Hong Kong regulation is totally dependent on the green lights and the go-ahead of Beijing, but I actually think that Beijing is probably supportive of testing things in Hong Kong.”

The deeper problem may not be regulatory at all. Industry players pointed out that the fundamental question remains: what is a Hong Kong dollar stablecoin actually for?

“In a sense, the Hong Kong dollar is already a form of stablecoin because it’s pegged to the US dollar and backed by the US treasury bonds,” Sun said. “ So the question of what purpose a Hong Kong dollar stablecoin actually serves is the biggest challenge.”

Given that Hong Kong already had well-established payment systems, such as Octopus, WeChat, and Alipay, it would be faster for retail consumers to use those methods rather than stablecoins, he added.

Kristi Swartz, a partner at the fintech-specialised law firm DLA Piper, said the case for applying Hong Kong dollar stablecoins is real but narrow in an email.

“Regional corporate treasuries and multinational groups with Hong Kong as their Asia headquarters may take advantage of Hong Kong dollar stablecoins in their ‘back office’, behind-the-scenes payment operations,” she said. “These clients already operate in Hong Kong dollars, routinely manage intra-group funding and cash concentration across time zones where SWIFT cut-offs, nostro prefunding and delayed finality impose real costs and risk.”

Nonetheless, Wilkie Chen, a researcher at TRON, argued in a written statement that stablecoins are built to outperform existing payment tools, not just replicate them, since they are cheaper, faster, and safer than traditional ones, and that’s also a necessity of why the stablecoins should exist.

In the near term, he estimated that the growing number of Chinese technology companies expanding into overseas markets could make Hong Kong dollar stablecoins serve as an efficient settlement layer.

“With more Chinese AI firms seeking business in foreign markets, it’s more efficient for them to choose Hong Kong dollar stablecoins as a transaction method, and it makes Hong Kong more attractive for technology firms,” Chen said.

In addition, Swartz compared the city’s situation to Europe, where major banks have already adopted a MiCA-compliant Euro stablecoin to support settlement, treasury flows, and tokenised assets rather than retail payments.

“When banks themselves decide that tokenised money is necessary infrastructure, the use case is no longer theoretical,” Swartz said. “ In that sense, Hong Kong is converging with Europe.”

The deeper problem may not be regulatory at all. Industry players pointed out that the fundamental question remains: what is a Hong Kong dollar stablecoin actually for?

“In a sense, the Hong Kong dollar is already a form of stablecoin because it’s pegged to the US dollar and backed by the US treasury bonds,” Sun said. “ So the question of what purpose a Hong Kong dollar stablecoin actually serves is the biggest challenge.”

Given that Hong Kong already had well-established payment systems, such as Octopus, WeChat, and Alipay, it would be faster for retail consumers to use those methods rather than stablecoins, he added.

Kristi Swartz, a partner at the fintech-specialised law firm DLA Piper, said the case for applying Hong Kong dollar stablecoins is real but narrow in an email.

“Regional corporate treasuries and multinational groups with Hong Kong as their Asia headquarters may take advantage of Hong Kong dollar stablecoins in their ‘back office’, behind-the-scenes payment operations,” she said. “These clients already operate in Hong Kong dollars, routinely manage intra-group funding and cash concentration across time zones where SWIFT cut-offs, nostro prefunding and delayed finality impose real costs and risk.”

Nonetheless, Wilkie Chen, a researcher at TRON, argued in a written statement that stablecoins are built to outperform existing payment tools, not just replicate them, since they are cheaper, faster, and safer than traditional ones, and that’s also a necessity of why the stablecoins should exist.

In the near term, he estimated that the growing number of Chinese technology companies expanding into overseas markets could make Hong Kong dollar stablecoins serve as an efficient settlement layer.

“With more Chinese AI firms seeking business in foreign markets, it’s more efficient for them to choose Hong Kong dollar stablecoins as a transaction method, and it makes Hong Kong more attractive for technology firms,” Chen said.

In addition, Swartz compared the city’s situation to Europe, where major banks have already adopted a MiCA-compliant Euro stablecoin to support settlement, treasury flows, and tokenised assets rather than retail payments.

“When banks themselves decide that tokenised money is necessary infrastructure, the use case is no longer theoretical,” Swartz said. “ In that sense, Hong Kong is converging with Europe.”

Whatever domestic use case eventually emerges, the external competition remains structural, and it is being made harder by forces beyond the HKMA’s control.

The top 10 issuers are all pegged to the US dollar assets. Among those, Tether and Circle lead the market with 66.5% and 28% of market distribution, respectively, according to stablecoin.com.

Meanwhile, US President Donald Trump signed the GENIUS Act on Jul. 18, 2025, which requires stablecoins to be fully backed by liquid US dollar assets and short-term Treasury bills, allowing Washington to set the standards for a rapidly expanding segment of digital finance.

The federal framework favoured US dollar stablecoins as a way to extend the use of the dollar through decentralised, privately issued instruments that could circulate globally.

Regarding the Act, Swartz noted that it would raise the commercial bar for competing with US dollar stablecoins and make it harder for non-dollar stablecoins to secure cross-border contracts.

“Contracts gravitate toward what counterparties, auditors, and courts understand,” she said. “US dollar stablecoins benefit from deep liquidity, existing hedging markets, and legal familiarity.”

She anticipated the market would be bifurcated with US dollar stablecoins dominating globally, while non-US dollar stablecoins playing critical regional and functional roles.

D’anethan acknowledged the challenge on scale, noting that it’s a matter of relevance when we look at volume, and said it’s meaningless to compare it to the transaction volume of USDT (Tether) or USDC (Circle), given the small volume of Hong Kong dollar stablecoins.

“I think for the Hong Kong dollar to be at least relevant, you would want to see something like $100 million equivalent to flow among providers,” he explained. “Let’s say $100 million split between four issuers is $25 million. Is that relevant? Absolutely not.”

He still thought there was no direct competition between the US and the Hong Kong dollar stablecoins, as the city’s stablecoin would only appeal to local users in local transactions, which US dollar stablecoin users wouldn’t see.

In the same vein, Chen said the Hong Kong dollar stablecoin would focus more on local transactions and the Southeast Asia market.

“The US dollar dominates global digital asset flows because of its reserve currency status. That is not going to change anytime soon,” he explained. “If in a certain region, Hong Kong dollar settlement is a necessary or relatively friendly option, then it can be more attractive than US dollar stablecoins.”

Whatever domestic use case eventually emerges, the external competition remains structural, and it is being made harder by forces beyond the HKMA’s control.

The top 10 issuers are all pegged to the US dollar assets. Among those, Tether and Circle lead the market with 66.5% and 28% of market distribution, respectively, according to stablecoin.com.

Meanwhile, US President Donald Trump signed the GENIUS Act on Jul. 18, 2025, which requires stablecoins to be fully backed by liquid US dollar assets and short-term Treasury bills, allowing Washington to set the standards for a rapidly expanding segment of digital finance.

The federal framework favoured US dollar stablecoins as a way to extend the use of the dollar through decentralised, privately issued instruments that could circulate globally.

Regarding the Act, Swartz noted that it would raise the commercial bar for competing with US dollar stablecoins and make it harder for non-dollar stablecoins to secure cross-border contracts.

“Contracts gravitate toward what counterparties, auditors, and courts understand,” she said. “US dollar stablecoins benefit from deep liquidity, existing hedging markets, and legal familiarity.”

She anticipated the market would be bifurcated with US dollar stablecoins dominating globally, while non-US dollar stablecoins playing critical regional and functional roles.

D’anethan acknowledged the challenge on scale, noting that it’s a matter of relevance when we look at volume, and said it’s meaningless to compare it to the transaction volume of USDT (Tether) or USDC (Circle), given the small volume of Hong Kong dollar stablecoins.

“I think for the Hong Kong dollar to be at least relevant, you would want to see something like $100 million equivalent to flow among providers,” he explained. “Let’s say $100 million split between four issuers is $25 million. Is that relevant? Absolutely not.”

He still thought there was no direct competition between the US and the Hong Kong dollar stablecoins, as the city’s stablecoin would only appeal to local users in local transactions, which US dollar stablecoin users wouldn’t see.

In the same vein, Chen said the Hong Kong dollar stablecoin would focus more on local transactions and the Southeast Asia market.

“The US dollar dominates global digital asset flows because of its reserve currency status. That is not going to change anytime soon,” he explained. “If in a certain region, Hong Kong dollar settlement is a necessary or relatively friendly option, then it can be more attractive than US dollar stablecoins.”

Although Hong Kong stablecoins could face many challenges, analysts and industry players are optimistic about the currency’s digital future.

Ng, the lawmaker, is bullish on the broader future.

“Hong Kong has a stable government and a progressive system, so I think Hong Kong is a very good place for doing business, not only in financial business but also in any other business,” he said.

However, D’anethan was less certain.

“I think it will have some measure of success. I think one or two players will emerge as the winners,” he said. “Will the Hong Kong dollar stable coin have an impact on the crypto space and on the global scene? I don’t think so.”

“I think it’s just a bit too small and most of the big transactions are US dollars anyway,” he added.

For participants who are advising clients right now, the answer is still cautious.

Swartz said her honest advice would be “probably better to wait and see”, and companies should experiment with stablecoins for internal company transfers, digital asset transactions, and test payments with partners they already trust.

“Stablecoins are no longer a fringe concept,” Swartz said. “Between Hong Kong, Europe and the US, we are watching money itself become programmable, slowly, carefully, and institutionally.”

Although Hong Kong stablecoins could face many challenges, analysts and industry players are optimistic about the currency’s digital future.

Ng, the lawmaker, is bullish on the broader future.

“Hong Kong has a stable government and a progressive system, so I think Hong Kong is a very good place for doing business, not only in financial business but also in any other business,” he said.

However, D’anethan was less certain.

“I think it will have some measure of success. I think one or two players will emerge as the winners,” he said. “Will the Hong Kong dollar stable coin have an impact on the crypto space and on the global scene? I don’t think so.”

“I think it’s just a bit too small and most of the big transactions are US dollars anyway,” he added.

For participants who are advising clients right now, the answer is still cautious.

Swartz said her honest advice would be “probably better to wait and see”, and companies should experiment with stablecoins for internal company transfers, digital asset transactions, and test payments with partners they already trust.

“Stablecoins are no longer a fringe concept,” Swartz said. “Between Hong Kong, Europe and the US, we are watching money itself become programmable, slowly, carefully, and institutionally.”