Hong Kong cautiously advances stablecoin development, emphasizing risk management

Recently, multiple regulatory departments in the Hong Kong Special Administrative Region have frequently stated that the issuance and application of stablecoins are still in the exploratory stage and need to be advanced cautiously. They emphasized that stablecoins are not tools for speculation, but should return to their original intention of helping the real economy and improving the efficiency of capital circulation.

Hong Kong is working hard to align the issuance and regulation of stablecoins with the compliance framework of traditional finance. As the world's first comprehensive regulatory framework for fiat stablecoins, the "Stablecoin Ordinance" passed by the Hong Kong Legislative Council will take effect on August 1, at which point the Monetary Authority will begin accepting license applications.

However, the entry threshold is relatively high. The president of the Monetary Authority, Yu Weimen, stated that considering the emerging nature of stablecoins, the associated risks, and the market capacity, only a limited number of licenses may be granted initially. This is seen as "expectation management" regarding market enthusiasm.

The Secretary for Financial Services and the Treasury of the Hong Kong Special Administrative Region, Xu Zhengyu, stated that the government aims to issue the first batch of licenses within this year. He emphasized that Hong Kong's credibility comes from high-quality financial regulation and that stablecoins should not be seen as speculative tools.

There are still multiple factors affecting the licensing process, such as the Monetary Authority consulting the market on how to implement the "Regulations", and will subsequently issue guiding policies that involve requirements such as anti-money laundering. The applying institutions need to establish a complete KYC/KYT process and implement sanctions list screening to comply with regulatory requirements.

In terms of application scenarios, cross-border payments are a potential key area. In 2024, the transaction volume supported by stablecoins has reached $27.6 trillion, surpassing the total of Visa and Mastercard. However, stablecoins are not the only option, as new payment tools such as CBDC networks and tokenized deposits are also in competition.

There are views that the Hong Kong regulators hope the industry will be more rational and implement stablecoin projects around the actual needs of the real economy, rather than a rush to issue coins. This reflects Hong Kong's original intention to promote the development of stablecoins.

Regarding the issuance of stablecoins pegged to the Renminbi, although there is a certain possibility from the perspectives of law and the internationalization strategy of the Renminbi, the current policies have not yet been fully clarified. In the future, if there is clearer support from the central bank, it may help promote the improvement of relevant mechanisms.

Overall, Hong Kong is carefully balancing innovation and risk, striving to establish a trustworthy stablecoin market environment.