Over 40 Firms Eye Scarce Hong Kong Stablecoin Licenses

• Hong Kong expects to issue fewer than 10 stablecoin licenses despite 40+ applicants.
• JD.com, Standard Chartered, and Ant Group are leading the stablecoin license race.
• Experts warn stablecoins enhance payments but won’t replace sovereign currencies.

Hong Kong’s stablecoin regulatory framework is set to launch on August 1. The Hong Kong Monetary Authority (HKMA) will begin accepting license applications on the same day. However, the number of licenses to be granted is expected to remain limited. Authorities project that fewer than 10 licenses will be issued in total.

With the new regime, over 40 major institutions are preparing to submit their applications. These include leading financial and tech firms such as JD.com, Standard Chartered, and Yuanbi. Law firms report that dozens of additional companies are in the consultation phase. The surge in interest is intensifying competition for the scarce licenses available.

Major Firms Lead the Application Drive

Large internet companies and financial institutions are driving the surge in licensing. JD Coin Chain, Standard Chartered–Anti-HKT Consortium, and Yuancoin Innovation have publicly confirmed their intentions. Ant International and Ant Digits have also expressed strong interest in expanding stablecoin operations.

These companies are recruiting blockchain experts to prepare the applications. A significant proportion of applicants are involved in supply chain finance or cross-border payment operations. According to Alex Zuo of Cobo, smaller institutions may struggle to meet the qualification requirements. The application process favors firms with deep financial, legal, and technical resources.

Two major use cases are emerging for stablecoins. First, companies involved in cross-border payments want to streamline digital transactions. These firms may not issue coins themselves but need access to stablecoin infrastructure. Second, large tech companies aim to issue their stablecoins. They are applying for licenses as a means to enter the digital currency market directly.

Regulatory and Technical Challenges Remain

Hong Kong’s stablecoin licenses are designed to support legal tender–backed coins. Christopher Hui, the Secretary for Financial Services and the Treasury, confirmed that licenses could be issued within the year. However, stablecoins involving foreign currencies will require coordination with external regulators. Authorities must assess risks, such as the impact of exchange rates and systemic financial threats.

The current framework allows stablecoins backed by sovereign currencies to operate. However, when the currencies have their counterparts in other jurisdictions, then extra attention must be given. Regardless of the regulatory issues, companies are forging ahead with their plan to introduce yuan-backed stablecoins. JD.com and Ant Group are also reportedly in negotiations with the Central Bank of China to facilitate yuan-based stablecoins offshore.

Hong Kong’s position contrasts with mainland China’s strict crypto ban. The city has launched a stablecoin sandbox and welcomed major players like Animoca Brands and RD InnoTech. Its regulatory flexibility is attracting firms seeking regional hubs for digital finance.

Industry Experts Warn Against Overhyping Stablecoins

Despite growing excitement, experts caution against exaggerating the role of stablecoins. Qiao Yide from the Shanghai Development Research Foundation emphasized that stablecoins cannot replace sovereign currencies. They extend the functions of legal tender but rely on the same financial infrastructure.

Stablecoins are promoted for improving cross-border payments. However, recent studies indicate that the cost savings may be limited. Actual costs for cross-border stablecoin transactions can approach 1%. These include fees for conversion, gas, compliance, and foreign exchange risks.

A BIS report also questions the viability of stablecoins as foundational currency systems. It cites concerns about stability, issuer differences, and overall systemic coherence. These findings support the view that stablecoins will supplement, not transform, the monetary system.

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The theme of stablecoin has been exploited in the short term by some companies. As people with roots in the sector have reported, some companies publish press releases without the actual technical capability. These drives are usually aimed at pumping up stock prices, rather than developing viable products. Such a tendency introduces noise into the market and dilutes quality innovation.

Companies that want to succeed in the stablecoin market must be able to operate effectively across finance, technology, and cryptocurrency. Asset management, compliance knowledge, and scalable design are all critical. Profits in basic exchange services are also becoming increasingly thin, which has made the generation of yield from assets all the more significant.

Although the introduction of stablecoin license issuance in Hong Kong is a significant process, we should not expect a substantial impact. The market is also becoming increasingly competitive, and only a few firms will be allocated licenses.

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