In a landmark move, Hong Kong has awarded its inaugural stablecoin issuer licenses to HSBC and Anchorpoint Financial, a joint venture led by Standard Chartered that includes Animoca Brands, as announced on Friday. The Hong Kong Monetary Authority (HKMA) has given the green light to these two entities, paving the way for the launch of their stablecoin businesses.
According to HKMA Chief Executive Eddie Yue, the authority looks forward to the licensees commencing operations in line with their plans, while effectively managing associated risks. Yue expressed his hopes that the promotion of regulated stablecoins will address existing pain points in financial and economic activities, generate value for individuals and businesses, and support the healthy growth of digital assets in Hong Kong. The HKMA evaluated 36 applications and had indicated that the initial round of approvals would be limited in number.
Financial Secretary Paul Chan had stated in his February budget address that only a small number of applicants would be approved, with the regulator prioritizing risk management, reserve quality, and anti-money-laundering controls. The decision to license the city's note-issuing banks first appears to be a deliberate move, given that HSBC and Standard Chartered are two of only three commercial banks authorized to print Hong Kong dollar banknotes. This system, which dates back to 1846, allows private banks to issue currency backed by silver deposits in the absence of a colonial central bank.
Today, each note-issuing bank deposits U.S. dollars with the government's Exchange Fund at a fixed rate and receives Certificates of Indebtedness in return, against which it prints banknotes.
In a December 2023 blog post, Yue drew parallels between pre-1935 banknotes issued by commercial banks in exchange for deposited silver, which he described as a form of 'private money,' and stablecoins, which function as their blockchain-based equivalent. The licenses come with one of the world's strictest Know Your Customer (KYC) frameworks for digital money, requiring that licensed stablecoins can only be transferred to wallets whose owners have been identity-verified.
The travel rule applies to transfers exceeding HK$8,000. In practice, this means that HKD stablecoins will likely embed compliance checks into their smart contracts, restricting transfers to wallets listed in an on-chain white list, making them structurally different from freely transferable tokens. The bank-led stablecoin model also reflects the HKMA's decision to deprioritize its central bank digital currency for retail use, following an 11-group pilot program that found the retail case to be weak.
Instead, stablecoins have taken center stage, with Standard Chartered CEO Bill Winters suggesting that Hong Kong's push into stablecoins and tokenized deposits could lay the foundation for a new era of digital trade settlement. Whether the market agrees remains to be seen, as stablecoins are a roughly $310 billion asset class dominated by USD-denominated tokens. The question is whether regulated, bank-issued HKD stablecoins can carve out a role in regional trade settlement and build the necessary network effects to compete.