I'm LongbridgeAI, I can summarize articles.HSBC and a consortium led by Standard Chartered have received Hong Kong's first stablecoin issuer licenses, marking a significant step in the city's efforts to become a global digital asset hub. The Hong Kong Monetary Authority (HKMA) announced the approval after reviewing 36 applications, emphasizing the importance of traditional financial experience in managing stablecoins. The licensees will issue stablecoins pegged to the Hong Kong dollar and plan to launch their services in the coming months. This move reflects Hong Kong's stringent regulatory approach to stablecoins amid broader cryptocurrency developments in the region.
HSBC and a consortium led by Standard Chartered have been awarded Hong Kong’s first stablecoin issuer licences, marking the city’s latest step towards embracing cryptocurrency’s most-traded cash substitute in its bid to become a global digital asset hub. “The two applicants have experience in traditional financial and risk management, which fits the mission of stablecoins that aim to bridge traditional finance and digital finance,” said Hong Kong Monetary Authority (HKMA) deputy chief executive Darryl Chan. Eight months after Hong Kong’s Stablecoin Ordinance, one of the world’s first such laws, took effect, the two issuers were given the green light to conduct business, the HKMA announced on Friday. The authority had revealed that it would only grant a small number of licences after assessing 36 applications. Both licensees will issue stablecoins that will be pegged to the Hong Kong dollar, and can conduct cross border payments later. According to the licensees’ business plans, they intend to complete the necessary preparation work and launch business in the coming few months. Friday’s announcement confirms an exclusive South China Morning Post report a month ago naming HSBC and a Standard Chartered-led group as the likely awardees. The announcement came later than initially expected, with industry players attributing that to a slower-than-expected review process. “The delay itself is manageable as a few weeks for tighter controls is not a dealbreaker,” said David Chang, founder and CEO of venture capital firm MindWorks. The small number of established players reflects the city’s stringent approach to regulating stablecoins – cryptocurrencies typically pegged to a fiat currency or other reference assets – as it seeks to prevent destabilisation of financial systems amid the easier flow of money enabled by blockchain technology. As one of Hong Kong’s three note-issuing banks, HSBC CEO Georges Elhedery in March praised the city’s “comprehensive and safe regulatory environment” ahead of the HKMA announcement. However, the bank did not directly disclose its plans now that it has received a stablecoin licence. Instead, much of the attention was on its tokenisation projects, including tokenised deposits, which represent existing bank deposits as digital tokens on a blockchain. Anchorpoint Financial, a joint venture formed by Standard Chartered Bank, Animoca Brands and Hong Kong Telecommunications, received a licence to conduct regulated activities for its stablecoins pegged to the Hong Kong dollar. The announcement of licensed stablecoin issuers in Hong Kong comes after China in February explicitly banned the onshore tokenisation of real-world assets (RWAs), tightened scrutiny of related offshore activities and barred the issuance of yuan-pegged offshore stablecoins without authorisation. Over the past several months, both Beijing and Hong Kong have commented on the hype around stablecoins and RWAs, with the potential rise of scams and fraud, as well as stock price speculation. In Beijing’s case, the tough stance aligns with its long-time capital controls and a cryptocurrency ban issued in 2021. However, experts said Hong Kong could serve as a testing ground for financial innovations such as stablecoins, especially amid competition with the US and tailwinds for the internationalisation of the yuan. “Hong Kong is a testing field for Chinese assets and money to go abroad on the blockchain,” said Raymond Chan, vice-chairman of the Institute of Financial Technologists of Asia. “We are the firewall defending against challenges that may disrupt the market in China, thanks to our full set of regulations.” Stablecoins were a “must-have” and “basic building block” in the Web3 ecosystem, according to Neil Tan, a member of the Hong Kong government’s Web3 task force. “If blockchain is the body, AI is the brain and stablecoins are the essential blood, keeping value flowing smoothly through the system.” The global market value of stablecoins stands at about US$315 billion, with annual transaction volumes of up to US$35 trillion, industry data showed. Use cases for stablecoins would not only be payments and easing conversion to and from fiat currencies, but also trading and settlement of RWAs and other tokenised assets, Tan said.