The Hong Kong Monetary Authority has awarded its inaugural stablecoin issuer licenses to HSBC and Anchorpoint Financial, a joint venture led by Standard Chartered that includes Animoca Brands, marking a significant milestone in the territory's financial landscape. According to HKMA Chief Executive Eddie Yue, the approved issuers are expected to launch their operations in accordance with their plans, while ensuring the proper management of associated risks. Yue expressed his hopes that the regulated stablecoins will address existing pain points in financial and economic activities, generate value for both individuals and businesses, and contribute to the healthy development of digital assets in Hong Kong.
Following the assessment of 36 applications, the HKMA has granted licenses to a limited number of applicants, prioritizing risk management, reserve quality, and anti-money-laundering controls. This deliberate decision to license note-issuing banks first, such as HSBC and Standard Chartered, reflects the city's long-standing tradition of private banks issuing currency.
Today, these banks deposit US dollars with the government's Exchange Fund at a fixed rate and receive Certificates of Indebtedness, which are used to print banknotes. In a blog post, Yue drew parallels between pre-1935 banknotes issued by commercial banks and stablecoins, highlighting their role as a medium of exchange. The licenses are accompanied by one of the world's strictest Know Your Customer (KYC) frameworks for digital money, requiring licensed stablecoins to be transferred only to wallets whose owners have undergone identity verification.
The travel rule applies to transfers exceeding HK$8,000. As a result, HKD stablecoins are likely to embed compliance checks into their smart contracts, restricting transfers to wallets listed in an on-chain white list. This approach differs from freely transferable tokens like USDT or USDC.
The bank-led stablecoin model also reflects the HKMA's decision to deprioritize its central bank digital currency (CBDC) for retail use, following an 11-group pilot program that found the retail case to be weak. Instead, stablecoins have become a key focus area, with Standard Chartered CEO Bill Winters highlighting their potential to lay the foundation for a new era of digital trade settlement.
The market's response to this development remains to be seen, with stablecoins currently representing a $310 billion asset class dominated by USD-denominated tokens. Hong Kong is betting on regulated, bank-issued HKD stablecoins to carve out a role in regional trade settlement, but it remains to be seen whether a non-dollar stablecoin can build the necessary network effects to compete.