<div id="readability-page-1">The Hong Kong Monetary Authority (HKMA) is being urged to go further in loosening restrictions on stablecoins, after granting the city’s first two licences to banks to issue the digital currency. Bankers, venture capitalists and analysts said the long-awaited approvals – awarded to HSBC and a joint venture led by Standard Chartered – fell short of market expectations, underscoring the regulator’s cautious stance amid lingering risk concerns. “It came as a surprise that only two licences were issued, and both to traditional banks,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International. “The market had expected the authority to issue at least three licences for stablecoin issuers from a broader range of backgrounds.” Ng said the HKMA was prioritising risk management, even as it sought to promote financial innovation through stablecoins. Unlike highly volatile cryptocurrencies such as bitcoin and Ethereum, stablecoins are typically pegged to fiat currencies or other reference assets, with the aim of combining the efficiency of digital assets with the stability of traditional money.  Hong Kong is among the first jurisdictions to introduce a comprehensive regulatory framework for stablecoin issuance. Its Stablecoin Ordinance – one of the world’s earliest such laws – came into effect in August last year, reinforcing the city’s ambitions to become a global digital asset hub. “We believe this signals a conservative regulatory approach, with banks – rather than less-regulated players – at the forefront of market development,” S&amp;P Global Ratings said in a research note following the announcement. The approvals also arrived later than expected. The HKMA had previously indicated it would issue only a small number of licences after reviewing 36 applications. Deputy CEO Darryl Chan Wai-man said the delay reflected a longer-than-anticipated review process, as regulators sought to ensure applicants met stringent requirements on risk management, know-your-customer checks and operational resilience. Industry participants are now calling for broader access in future rounds. David Chang, founder and CEO of venture capital firm MindWorks, said licences for non-bank issuers and technology start-ups would be a welcome next step alongside further deregulation. “At the moment, only banks have been licensed, and only Hong Kong dollar-pegged stablecoins are permitted,” he said. “We hope the next batch will include more non-bank companies and start-ups.” The HKMA selected HSBC and the Standard Chartered-led consortium in part because both were among the city’s note-issuing banks, with established experience in currency issuance and maintaining financial stability, said Kenny Tang Sing-hing, chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators. “We respect the results of the HKMA’s first batch of licensed stablecoin issuers,” RD Technologies, a fintech firm founded by former HKMA CEO Norman Chan Tak-lam, said in a statement. “We will continue to maintain close communication with regulatory bodies and look forward to achieving progress in the next phase of regulatory assessment and license issuance.”  RD Technologies was among participants in the HKMA’s stablecoin issuer sandbox, launched in 2024 to allow limited testing across use cases including e-commerce payments, cross-border settlements and tokenised asset trading. HSBC said on Friday it planned to launch a Hong Kong dollar-backed stablecoin in the second half of this year, integrating it into its PayMe and mobile banking platforms. Initial use cases will include peer-to-peer transfers and merchant payments. Meanwhile, Anchorpoint – the joint venture formed by Standard Chartered, Animoca Brands and Hong Kong Telecommunications – aimed to roll out its Hong Kong dollar stablecoin, HKD At Par (HKDAP), in the second quarter, initially targeting institutional investors, CEO Dominic Maffei said in a media briefing on Friday. Stablecoin-related products could expand banks’ fee income and product offerings, according to S&amp;P. They may also help lenders attract mainland Chinese clients seeking offshore crypto exposure, given restrictions on such assets in the domestic market. </div>

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<p>The Hong Kong Monetary Authority (HKMA) has issued its first two licenses for stablecoin issuance to HSBC and a Standard Chartered-led consortium, but industry experts believe this falls short of expectations. Analysts are calling for broader access to licenses for non-bank issuers and technology start-ups in future rounds. The HKMA's conservative approach prioritizes risk management, and the approvals are seen as a step towards establishing Hong Kong as a global digital asset hub. HSBC plans to launch a Hong Kong dollar-backed stablecoin, while the joint venture aims to target institutional investors with its own stablecoin.</p>

- The Hong Kong Monetary Authority (HKMA) has granted its first two licences for stablecoin issuance to HSBC and a joint venture led by Standard Chartered, but industry stakeholders expected more licences and a wider range of issuers.  
- The HKMA's cautious approach highlights its focus on risk management while seeking to promote financial innovation.  
- Future calls for broader access may lead to licences for non-bank issuers, potentially expanding the scope of digital currencies in Hong Kong.

Calls grow for HKMA to go further on stablecoins after conservative first batch