Hong Kong Stablecoin Licensing Race Heats Up as Over 40 Firms Compete

Hong Kong's upcoming stablecoin licensing regime, set to take effect on August 1, has sparked fierce competition among financial and technology firms. The Hong Kong Monetary Authority (HKMA) plans to issue only a limited number of licenses — potentially fewer than ten — making this regulatory approval highly coveted.

Reportedly, more than 40 companies — including Standard Chartered, JD.com, and Circle — have already submitted applications, while dozens more are consulting legal firms or preparing materials. Applicants include major Chinese financial institutions and tech giants such as Ant Group, reflecting the high-stakes nature of the competition. However, stringent requirements and intense competition leave smaller enterprises with slim chances of approval.

Alex Zuo, Senior Vice President of Cobo, remarked, "Hong Kong's stablecoin licenses are scarce and highly competitive. Most applicants are major Chinese financial institutions and internet companies, leaving smaller firms with limited opportunities."

In addition to financial institutions, large internet companies are ramping up efforts to secure stablecoin licenses, actively recruiting blockchain talent to bolster their applications. The licensing initiative is part of Hong Kong's broader push to regulate cryptocurrencies while fostering innovation in blockchain technology.

Stablecoins Stir Capital Markets but Face Structural Limitations

The excitement around stablecoins has spilled over into capital markets, with non-bank sectors and tech stocks seeing increased activity.

Despite the enthusiasm, experts remain cautious about how transformative these instruments might be. Joe Yide, Vice President of the Shanghai Development Research Foundation, noted that while stablecoins may improve cross-border payment efficiency, the true cost could be closer to 1% — far higher than the near-zero fees often promoted.

Moreover, since stablecoins are pegged to sovereign currencies, they extend fiat functionality rather than fundamentally disrupt existing systems.

Some smaller firms have reportedly exploited the stablecoin narrative to drive short-term stock price surges, raising concerns over speculative abuse.

In response to such risks, the HKMA appears to be taking a cautious stance — mirroring the Securities and Futures Commission’s measured approach to virtual asset platforms. So far, the SFC has granted only 11 crypto exchange licenses, reflecting Hong Kong’s strict regulatory standards.

The licensing race highlights stablecoins' growing importance in reshaping global monetary systems. As Hong Kong positions itself as a global hub for digital finance, the outcome of this regulatory competition could set the tone for future developments in the sector.