How will Hong Kong decide on the 77 stablecoin license applications?

September 12, 2025 09:39

Faced with 77 applications for stablecoin licenses, the Hong Kong SAR government and financial regulators are caught in a "sweet dilemma": granting all licenses would put regulatory pressure on them, while selectively granting them could harm the reputation of the rule of law. The core issue directly points to how Hong Kong can seize the opportunities for stablecoin development while avoiding financial risks.
1. The essence of stablecoin competition: a dual game of national strength and entrepreneurial spirit.
The competition among stablecoins appears to be a technological race among companies, but in reality, it is a contest of national financial strength and institutional advantages. The rise of the US dollar stablecoin poses a challenge to sovereign currencies, and weaker sovereign currencies may gradually withdraw from the international market.
In this competition, entrepreneurship is crucial. Historical cases confirm its value:
In 1694, Scottish entrepreneur William Paterson founded the Bank of England, laying the foundation for the modern monetary system.
In 1983, Financial Secretary John C. Tsang implemented the linked exchange rate system with entrepreneurial spirit, saving Hong Kong from a currency crisis and consolidating its position as an international financial center.
Currently, Hong Kong needs to balance risk management and innovative vitality, combining professional regulation with entrepreneurial innovation, breaking through the limitations of cautious professional managers, and seizing the key opportunities for stablecoin development.
Analysis of the Advantages, Disadvantages, and Pathways of Issuing Type II and III Stablecoins
(1) Hong Kong Dollar Stablecoin: Institutional Reconstruction under Realistic Constraints
Real challenge: The Hong Kong dollar implements a linked exchange rate system, allowing multiple enterprises to issue stablecoins, which can easily be exploited by speculators to arbitrage the price difference between the US dollar, Hong Kong dollar, and stablecoins, leading to risks.
Optimal solution: The Monetary Authority, relying on the linked exchange rate system, designates HSBC, Standard Chartered, and Bank of China (Hong Kong) as the three note-issuing banks to issue stablecoins, incorporating the credit and stability of the stablecoin into the management of the Monetary Authority, maximizing the use of the existing system.
(2) US Dollar Stablecoin (USHK): A significant historical opportunity for Hong Kong
Core advantages: The stability of the US dollar is guaranteed by the Federal Reserve, and the Monetary Authority only needs to ensure that USHK is pegged to the US dollar, with the issuing entities expandable to multiple qualified institutions.
Innovative profit mechanism: The Monetary Authority can allocate part of the interest from its held U.S. Treasury bonds to the issuing institutions, making it more attractive than Tether and institutions restricted by the U.S. "Genius Act."
Credit Transparency: The 42-year reputation accumulation of the Monetary Authority, with mature and transparent auditing and operational processes, far surpasses that of private institutions.
Unified Brand Effect: The unified brand "USHK" is conducive to forming scale effects, enhancing international acceptance, and highlighting the characteristics of Hong Kong as a financial center.
Implementation Path: Prioritize issuing on Ethereum, establish a transparent centralized database to strengthen AML/CFT controls, and formulate rules to ensure compliance with bank-level KYC, AML, and CFT standards. From a geopolitical perspective, as a rule-of-law country, the likelihood of U.S. intervention is low, and USHK is launched with international legitimacy.
(3) Renminbi stablecoin (CNHK): A cautiously promoted limited choice
The issuance mechanism can refer to the first two categories but must be strictly limited to the offshore RMB market, with a scale controlled at about 3 trillion, to avoid impacting the financial stability of the mainland. It is unrealistic to try to promote the internationalization of the RMB through this, as it is restricted by the non-convertibility of the RMB. The idea of gold backing is outdated and shortsighted; development must be based on not undermining the financial stability of the mainland and should be advanced cautiously.
3. Weighing the Pros and Cons of Approval Decisions

4. Policy Recommendations to Seize Historical Opportunities
1. Establish a differentiated regulatory framework: classify management according to the nature of the issuing entity, implement strict regulation on systemically important stablecoins, and appropriately relax conditions for limited scope stablecoins.
2. Prioritize the development of the US dollar stablecoin (USHK): Concentrate resources to make it a core competitiveness, relying on Hong Kong's rule of law, financial infrastructure, and internationalization advantages, to make it a safer and more transparent choice than USDT.
3. Strictly control the issuance of Hong Kong dollar stablecoins: limited to three issuing banks, coordinated with the linked exchange rate system, to avoid arbitrage and financial risks.
4. Prudently advance the RMB stablecoin: limited to offshore markets, with a controllable scale, pilot projects should be implemented to accumulate experience before gradually expanding.
5. Introduce a regulatory sandbox mechanism: Allow companies to test new stablecoins and technologies in a restricted environment to provide practical evidence for improving the regulatory framework.
6. Strengthen the application of regulatory technology: Increase investment, utilize technologies such as blockchain and big data to achieve real-time monitoring and risk assessment, enhancing regulatory efficiency and accuracy.
7. Fostering Entrepreneurial Spirit: Reserve space for innovation within the regulatory framework, encourage professionals to participate in policy-making, and avoid conservative thinking from professional managers that hinders innovation.
5. Conclusion: Hong Kong's Key Choices and Historical Responsibilities
The 77 license applications present both challenges and opportunities; Hong Kong's choice is not simply to "approve or disapprove," but to achieve maximum returns and minimum risks through differentiated regulation and institutional innovation.
The USHK stablecoin is a significant historical opportunity. The Hong Kong dollar, as a US dollar-pegged coin, will not only be unaffected but may also benefit, as Hong Kong is expected to attract small-scale economies to adopt USHK. The competition for stablecoins is essentially a competition between countries, and Hong Kong needs to balance risk and innovation with entrepreneurial spirit.
Regulators need to demonstrate historical responsibility, combining regulatory rigor with innovative inclusiveness. The approval of 77 applications is a touchstone for testing the quality of Hong Kong as an international financial center. Hong Kong has the potential to become a global leader in stablecoin development, which depends on wise decision-making, innovative regulation, and the entrepreneurial spirit of taking responsibility.