Hong Kong Stablecoin Policy Implementation Cools Market Enthusiasm

The new policy for stablecoins in Hong Kong has officially come into effect, and the previously high market enthusiasm is beginning to cool down.

On August 1, the stablecoin concept stocks in the A-shares and Hong Kong stocks generally fell. In the Hong Kong stock market, several related companies saw their stock prices plummet, with declines ranging from 10% to 20%. The A-share market also experienced a certain degree of correction.

Contrary to previous expectations, the Hong Kong Monetary Authority did not release any relevant information on the day the policy took effect. In fact, the HKMA had already announced the licensing framework for stablecoin issuers on July 29.

At the technical briefing held on the same day, the Hong Kong Monetary Authority stated that the first batch of stablecoin issuer licenses is expected to be issued in early 2026. This timeline is later than the market's previous expectations. At the same time, the Monetary Authority emphasized concerns about money laundering risks and clearly stated that the identities of initial compliant stablecoin holders in Hong Kong must be verified, which to some extent implies the implementation of a real-name system.

In addition, officials from the Hong Kong Monetary Authority have repeatedly emphasized that only a single-digit number of licenses are expected to be issued in the first batch. This information differs from the previously optimistic expectations of the market.

Experts have pointed out that regulatory standards are stricter than expected, the timing of licenses is later than anticipated, and the number of licenses is fewer than expected. These factors have led to a pullback in stablecoin concept stocks. Overall, the market reflects new expectations for the implementation of Hong Kong's stablecoin policy.

The stance of the Hong Kong Monetary Authority indicates that during the initial licensing phase, more emphasis will be placed on safety and stability factors, which may mean that some popular institutions anticipated by the market may not be able to obtain the first batch of licenses.

Stablecoins, as a special type of cryptocurrency, have advantages such as decentralization, peer-to-peer transactions, low cost, and high efficiency. Unlike cryptocurrencies such as Bitcoin, stablecoins are usually pegged to fiat currencies or other reference assets to maintain a relatively stable value and serve as a medium for trading crypto assets.

In recent years, stablecoins have gradually penetrated traditional financial fields such as cross-border payments due to their characteristics of value stability, high efficiency, and low cost, and their application prospects have also received high attention from major economies around the world.

The Deputy Chief Executive of the Hong Kong Monetary Authority stated that institutions applying for licenses need to submit a large amount of documentation, which is labor-intensive, and the regulatory body also needs to invest equivalent effort to review all materials. This prudent and stable regulatory attitude reflects Hong Kong's intention to steadily advance its stablecoin business.

In terms of anti-money laundering, the Hong Kong Monetary Authority has proposed strict requirements. Currently, the Monetary Authority has issued anti-money laundering guidelines for licensed stablecoin issuers, covering various aspects such as risk assessment, customer due diligence, ongoing monitoring, stablecoin transfers, and suspicious transaction reporting.

It is worth noting that the Bank for International Settlements recently issued a strong warning about stablecoins, particularly pointing out significant flaws in their integrity, mainly manifested in their potential use to circumvent trust protection measures.

Despite the licensing progress being slower than expected, the market remains highly attentive to the licenses for stablecoin issuers in Hong Kong. Currently, dozens of institutions have expressed their intention to apply for stablecoin licenses, including payment institutions, internet companies, and commercial banks.

Some institutions are considered to be the top candidates for the first batch of licensed issuers, such as JD Group, Standard Chartered Bank, and YuanCoin Technology, which have entered the Hong Kong Monetary Authority's stablecoin issuer sandbox, as well as Bank of China Hong Kong and Ant Group, which are not in the sandbox. These institutions have a certain foundation in cross-border payments, blockchain technology, and anti-money laundering.

However, with the changing pace of licensing by the Hong Kong Monetary Authority, market expectations are also adjusting accordingly. The Monetary Authority's emphasis on safety and stability may mean that certain popular institutions expected by the market may not be able to obtain the first batch of licenses.

Overall, the official implementation of Hong Kong's stablecoin policy marks the beginning of a new phase. Although market enthusiasm has cooled somewhat, this may reflect a more pragmatic and cautious attitude, which is beneficial for the long-term healthy development of the stablecoin market.