In a significant development for the financial sector, Hong Kong has issued its first stablecoin licenses to a joint venture led by Standard Chartered, which includes Animoca Brands, and to HSBC, marking a major milestone under the Stablecoins Ordinance that took effect in August 2025. According to the Hong Kong Monetary Authority (HKMA), the territory's central bank, these approvals represent the first batch of licenses issued under the new ordinance. The chief executive of the HKMA, Eddie Yue, expressed his anticipation for the licensed issuers to commence operations as planned, exploring growth opportunities while managing risks effectively. Yue further emphasized the potential benefits of regulated stablecoins in addressing financial and economic challenges, creating value for both individuals and businesses, and supporting the healthy development of digital assets in Hong Kong.
The HKMA had received 36 applications and had indicated that only a limited number would be approved in the initial round, with a focus on risk management, reserve quality, and anti-money-laundering controls. The decision to prioritize the city's note-issuing banks, such as HSBC and Standard Chartered, appears to be a deliberate move, given their historical role in printing Hong Kong dollar banknotes.
The licensed stablecoins will be subject to one of the world's strictest Know Your Customer (KYC) frameworks for digital money, with transfers limited to wallets whose owners have undergone identity verification. This framework will require HKD stablecoins to embed compliance checks into their smart contracts, restricting transfers to wallets listed in an on-chain white list. The HKMA's approach reflects its decision to deprioritize the development of a central bank digital currency (CBDC) for retail use, following the completion of an 11-group pilot program that found the retail case to be weak. Instead, the focus has shifted to stablecoins, which are seen as a potential medium for cross-border commerce.
The success of this approach remains to be seen, given the dominance of USD-denominated tokens in the stablecoin market.