On August 1, 2025, Hong Kong’s Stablecoin Ordinance officially took effect, marking the implementation of the world’s first comprehensive regulatory framework for fiat-backed stablecoins. This event is not only a milestone in Hong Kong’s fintech development but may also set a global benchmark for stablecoin regulation.

1. Market Trends: Giants Rush In, Fierce Competition for Licenses

Following the enactment of the Stablecoin Ordinance, Hong Kong’s financial sector quickly erupted into a "license race." Although the Hong Kong Monetary Authority (HKMA) clarified that "no licenses have been issued as of August 1" and the first batch of licenses is expected to be announced in early 2026, market enthusiasm remains undiminished.

• Traditional Financial Institutions Take the Lead: Hong Kong’s three note-issuing banks—Bank of China (Hong Kong), HSBC, and Standard Chartered—have emerged as strong contenders for the first licenses, leveraging their extensive experience in fiat reserve management, robust capital strength, and close ties with regulators. Among them, Standard Chartered and Bank of China (Hong Kong) have already initiated the application process.

• Tech Giants Actively Position Themselves: JD CoinChain Technology has entered the second phase of the HKMA’s "Stablecoin Issuer Sandbox," testing scenarios including cross-border payments, supply chain finance, and retail transactions. Ant Group has also begun the application process and engaged in multiple rounds of discussions with regulators.

• Market Sentiment and Warnings: Despite the bullish sentiment, the Securities and Futures Commission (SFC) and HKMA jointly issued a statement on August 14, urging the public to remain cautious about market volatility related to stablecoin concepts. They emphasized that "expressing interest or submitting an application does not guarantee final approval" and warned market participants against making misleading statements. This reflects regulators’ heightened vigilance against "hype-driven speculation" and "stock price manipulation."

2. Regulatory Requirements: The World’s Strictest, Establishing the "Hong Kong Standard"

The core of Hong Kong’s Stablecoin Ordinance lies in its "strict oversight, high barriers, and strong transparency," making it arguably the world’s most stringent regulatory framework. Key requirements include:

• Mandatory Licensing: Any entity issuing fiat-backed stablecoins in Hong Kong or issuing HKD-pegged stablecoins overseas must obtain an HKMA license. Unlicensed operations face fines of up to HKD 5 million and 7 years imprisonment.

• High Capital Threshold: Non-bank applicants must maintain a minimum paid-up capital of HKD 25 million, ensuring only financially resilient issuers qualify.

• 100% Full Reserve and Asset Segregation: Issuers must hold 100% reserves in highly liquid assets (e.g., cash, short-term government bonds) and store them separately in licensed banks, ensuring "full backing, high liquidity, and strict segregation."

• Mandatory Transparency and AML Compliance: Issuers must publish daily reserve audit reports, implement robust KYC/AML mechanisms, and are prohibited from paying interest to prevent disguised deposit-taking. Only licensed entities may advertise.

• Prudent Licensing: HKMA Chief Executive Eddie Yue explicitly stated that only a "small number of licenses" (single digits) will be issued initially, emphasizing "quality over quantity" to ensure market stability.

By establishing the world’s strictest regulatory framework, Hong Kong aims to position itself as a "global hub for compliant digital finance," attracting genuine innovators with strong capabilities and compliance awareness—not speculators.

3. Latest Developments: Regulators "Pour Cold Water" and the Market "Cools Down"

By mid-August, Hong Kong’s stablecoin development entered a critical "cooling-off" and "observation" period. As of August 17, the HKMA and SFC had not disclosed any substantive progress in license approvals, reiterating that "preliminary discussions do not equate to approval." The regulators’ "cooling measures" have proven effective:

• Market Speculation Fades Rapidly: Stocks of companies that surged due to "stablecoin license hype" have since corrected sharply, indicating a shift from irrational speculation to rational assessments of fundamentals and regulatory outcomes.

• Applicants Face Rigorous Scrutiny: Over 50 institutions, including internet giants, international banks, and payment platforms, have expressed interest. However, regulators clarified that only a few licenses will be granted initially, with extremely high approval standards demanding robust capital, compliance, real-world use cases (e.g., cross-border trade settlements), and AML capabilities.

• Regulatory Tech Upgrades: To counter potential market manipulation, the SFC has deployed its dedicated market surveillance team and advanced systems to closely monitor stablecoin-related trading activities, with strict penalties for violations.

These developments send a clear message: Hong Kong’s stablecoin strategy is not about creating short-term market bubbles but building a long-term, stable, and compliant global digital financial infrastructure. License issuance will be cautious, gradual, and high-standard, with true "winners" being those capable of deeply integrating stablecoin technology with real-world economies while maintaining exceptional compliance.