<div id="readability-page-1"><div><p>In late 2023, the Hong Kong government and the Hong Kong Monetary Authority (HKMA) initiated a market consultation phase regarding stablecoins. The main themes of this phase were: Should Hong Kong develop stablecoins? How should stablecoins be regulated? And which cryptocurrencies should be included in the regulatory framework first? The final conclusion was to start with fiat-backed stablecoins, rather than immediately bringing all algorithmic stablecoins, commodity stablecoins, and RWA tokens under regulation. The term &#34;fiat-backed stablecoin&#34; is actually a term the Hong Kong government has consistently used. Essentially, it's a stablecoin backed by or pegged to fiat currency, commonly known as a fiat-backed stablecoin. However, in Hong Kong's regulatory context, it's called a fiat-referenced stablecoin. The meaning is similar, just a different term. This approach aligns with Hong Kong's consistent regulatory style: regulate what most resembles currency first, and regulate what is most likely to affect payments and financial stability first. I. HKMA Stablecoin Issuer Sandbox: Three Potential Players In March 2024, the HKMA officially launched the Stablecoin Issuer Sandbox program. The purpose of this sandbox program is to allow institutions intending to issue stablecoins to test their business arrangements, technical arrangements, reserve management, redemption mechanisms, risk control, and compliance processes within a limited scope. Three potential future Hong Kong stablecoin license holders emerged within the sandbox program. Image from &#34;Xiao Lin Says&#34; 1. First Group: JD Coin Chain, Domestic Capital Players The first group consists of domestic capital players, represented by JD Coin Chain. The leading company is JD.com, a domestic e-commerce giant. The supporting company is Tianxing Bank, a custodian bank. Tianxing Bank's two major shareholders are Xiaomi and Futu. Futu is the same Futu that was recently fined. This combination can be understood as follows: the leading company handles traditional payment scenarios, while the supporting company handles custody. In other words, JD.com itself has e-commerce, payment, and consumption scenarios, while Tianxing Bank is responsible for bank custody and financial infrastructure. 2. The Second Group: Yuanbi Innovation, Crypto Capital Players The second group consists of cryptocurrency capital players, represented by Yuanbi Innovation. The leader of this group is ZhongAn Group. ZhongAn Group, relying on ZhongAn Bank under ZhongAn Online, provides custody capabilities for stablecoin issuers. The smaller players include the Hong Kong-compliant exchange HashKey and investment firm Sequoia China. The logic behind this group is: The leader is responsible for custody, and the subordinate is responsible for Web3 and investment. ZA Bank provides banking and custody capabilities, HashKey is responsible for compliant transactions and the Web3 ecosystem, and Sequoia China provides capital and resource support. 3. The third group: Standard Chartered Bank + Animoca Brands + HKT, Hong Kong capital players. Standard Chartered Bank needs little introduction; it's one of the three major banks in Hong Kong. Animoca Brands is a long-established brand in the Web3 field, with strong product and ecosystem experience in gaming, NFTs, and the metaverse. HKT refers to Hong Kong Telecom, Hong Kong's largest integrated telecommunications service operator, primarily responsible for providing telecommunications infrastructure, mobile payment, and user distribution scenarios. The combination pattern of this group is: the eldest brother is a bank, and the younger brother is Web3 and infrastructure. In other words, Standard Chartered is responsible for banking, custody, compliance, and financial infrastructure; Animoca is responsible for the Web3 ecosystem; and HKT is responsible for telecommunications, payments, and user scenarios. II. Potential Applicants Outside the Sandbox Besides the prospective participants in the sandbox testing, there are also some players who did not make it into the first batch of sandbox participants but have expressed interest. For example, Ant International has also stated its intention to apply for a Hong Kong stablecoin license. However, there hasn't been much public information regarding the progress of Ant International's application. It may still be in preparation, or it may be affected by further regulatory, strategic, and business boundary changes. Regardless of the group of players, their underlying logic is similar: Capital + Banking + Application Scenarios. Some combinations prioritize application scenarios; some prioritize banks; and some combine Web3 ecosystems with financial institutions. III. Who obtained the license first? We now know that the third group of players ultimately won, or rather, obtained the license first. That group is: Standard Chartered Bank + Animoca Brands + HKT. This group later obtained the license through Anchorpoint Financial Limited. This also aligns with Hong Kong's regulatory preferences: Hong Kong capital leads the way, the team members are all local Hong Kong residents, regulators are more familiar with the business, and the business scenarios are easier for regulators to understand. In addition, there is another company not on the sandbox testing list, but which ultimately obtained one of only two entry tickets: HSBC Hong Kong. IV. Why was HSBC able to obtain a license? HSBC's acquisition of the license seems somewhat sudden. Unlike the three groups mentioned above, it didn't appear on the sandbox list early on, nor did it publicly form a team to compete. However, a closer look reveals that HSBC has been engaged in digital asset-related businesses in Hong Kong for the past three years. For example: tokenized deposits; digital bonds; gold tokens; and payment app scenarios. These innovations may not necessarily generate short-term profits, and could even be loss-making. However, these innovative practices actually laid the foundation for the later acquisition of stablecoin licenses. For large companies, it's often necessary to try new things. Immediate benefits may not be guaranteed, but a long-term perspective is crucial. Tokenized deposits, digital bonds, and gold tokens may not immediately generate substantial revenue for HSBC, but they have allowed HSBC to accumulate the capabilities most needed for a stablecoin license: compliance capabilities; custody capabilities; reserve asset management capabilities; corporate client resources; payment network; on-chain asset issuance experience; and regulatory communication experience. Therefore, unlike the three groups mentioned above that rushed in together, HSBC chose to go it alone. This is mainly due to HSBC's versatility. From compliance and custody capabilities to reserve asset management, corporate clients, and payment networks, HSBC can handle everything itself. From a regulatory perspective, HSBC, with its well-known background, is naturally more trustworthy than pure Web3 projects. As for JD.com, Yuanbi Innovation, and the potential Ant Financial, I believe the remaining companies will most likely obtain licenses; it's just a matter of batches. V. Hong Kong Stablecoin Bill Officially Takes Effect In May 2025, the Hong Kong Legislative Council passed the Stablecoin Bill, establishing a licensing system for fiat-backed stablecoin issuers. According to Reuters' summary: Entities issuing Hong Kong stablecoins, or Hong Kong dollar-backed stablecoins, need to obtain an HKMA license and meet requirements regarding reserve asset management, redemption procedures, and risk control. On August 1, 2025, the stablecoin issuer regulatory system officially came into effect. The HKMA also released documents regarding anti-money laundering, counter-terrorism financing, and stablecoin issuer licensing, explaining the regulations and application requirements. So what exactly are the requirements for this license? VI. What are the requirements for a stablecoin license? 1. Entity Requirements: Must be a Hong Kong local company or an authorized institution. HKMA requires applicants to be: 1. A Hong Kong company incorporated under the Hong Kong Companies Ordinance; or 2. An authorized institution as defined under the Hong Kong Banking Ordinance. If it is an overseas non-bank institution, it usually needs to establish a local subsidiary in Hong Kong to apply. This means that a Cayman Islands or BVI Web3 foundation cannot directly issue Hong Kong stablecoins. Many Web3 projects locate their project foundations, holding companies, and fund structures in the Cayman Islands or the British Virgin Islands (BVI). This is primarily because: tax arrangements are relatively flexible; company establishment and maintenance are well-established; international investors are familiar with these practices; and token issuance and investment agreement arrangements are more convenient. Many Web3 project teams are based in Hong Kong, Singapore, or Dubai, but register a BVI company to hold project equity, sign investment agreements, and arrange token issuance. However, this BVI company is not the same as a Hong Kong company, nor is it automatically subject to Hong Kong financial regulation. Therefore, to apply for a Hong Kong stablecoin license, one cannot simply use an offshore structure; a genuine Hong Kong entity and Hong Kong operational capabilities are required. 2. Capital Requirements: At least HK$25 million in paid-in capital. Stablecoin licenses also have capital requirements. The minimum threshold is: at least HK$25 million in paid-in capital. Of course, HK$25 million is just the minimum threshold. The real challenge isn't the money, but other capabilities: technical capabilities; reserve asset management capabilities; compliance capabilities; redemption mechanisms; risk control systems; auditing systems; anti-money laundering capabilities; and sustainable operational capabilities. Therefore, obtaining this license isn't simply a matter of raising HK$25 million. 3. Reserve Asset Requirements: 100% Full Backing The core of stablecoins is reserves. After a series of algorithmic stablecoin failures, the market has largely reached a consensus on this point. Hong Kong requires stablecoins to be backed by high-quality, highly liquid reserve assets, and to be fully backed. Simply put, whatever amount of stablecoins you issue, there must be sufficient assets to back it up. If it's a Hong Kong dollar stablecoin, then there should be corresponding Hong Kong dollars or high-quality Hong Kong dollar assets as reserves. This is completely different from algorithmic stablecoins. Algorithmic stablecoins rely more on market expectations, algorithmic adjustments, and arbitrage mechanisms; Hong Kong regulators want tangible asset backing. 4. Redemption Requirements: Users should be able to redeem at face value. Stablecoin holders should not only be able to sell stablecoins on the secondary market of exchanges, but should have a clear redemption right from the issuer. This point actually supplements point three. The ability to redeem stablecoins demonstrates that the reserve assets are truly and fully backed by the underlying assets. Otherwise, if a stablecoin can only maintain its price through secondary market liquidity, its credit foundation will be extremely fragile. Once market panic sets in and no one is willing to buy in the secondary market, the stablecoin may become unpegged. Therefore, it is crucial that stablecoin issuers allow users to redeem their coins at face value. 5. No interest should be paid to stablecoin holders. This is particularly important. If you ask AI, it will tell you: Once stablecoins can pay interest, they will become like deposits, money market funds, and wealth management products, and regulatory complexity will immediately increase. This is certainly one reason. But I think the more important issue is: As long as interest is paid, stablecoins are no longer just payment instruments, but rather begin to attract deposits in effect. You can imagine, if stablecoins can pay interest, wouldn't they become a kind of wealth management product? Why would users still put their money in banks? Putting it in stablecoins earns interest, allows them to buy on-chain US stocks and participate in on-chain finance, and provides access to fast cross-border payments and 24/7 liquidity. From a traditional financial perspective, this leads to a loss of bank savings. The fundamental function of banks is attracting deposits. Only after attracting deposits can they lend, and lending is the most important source of income for banks. If all the funds flow into stablecoins, wouldn't stablecoin issuers become a new type of bank? Therefore, from the perspectives of regulation, interests, and financial stability, it is currently difficult to allow stablecoins to directly pay interest. Of course, there are also factors at play behind this, such as existing interest groups protecting their own interests. However, the development of the times will not proceed entirely according to the will of any individual or group. As long as a financial model is more efficient and better meets market demands, it will eventually be adopted in some way. 6. White Paper and Disclosure Requirements Stablecoin issuers are also required to provide a white paper and related disclosure documents. This white paper borrows some formatting from Web3 token project white papers. However, it's not a marketing white paper; it's more like a financial product disclosure document. It needs to cover: Issuance mechanism; Redemption mechanism; Reserve asset arrangements; Usage conditions; Fee arrangements; Risk warnings; User rights; and Handling of abnormal situations. In other words, Hong Kong regulators don't care if you can tell a good story, but rather whether you clearly explain how the stablecoin is issued, how it's redeemed, how it's supported, and what to do if problems arise. 7. AML / KYC Requirements The HKMA has very strict requirements for AML and KYC. Stablecoin issuers are required to conduct: customer due diligence; sanctions list screening; high-risk region customer management; suspicious transaction monitoring; and anti-money laundering and counter-terrorism financing management. In layman's terms, this boils down to one sentence: Hong Kong stablecoins require real-name registration. This has become one of the most criticized features since the introduction of Hong Kong's stablecoin regulations. Many people believe that Hong Kong stablecoins lack Web3 DNA and should be completely permissionless and KYC-free like DeFi. However, if we look back at the development of stablecoins, we can see that compliance has become a major trend. The fact that USDC has been eroding USDT's market share also reveals this trend. The current state of Web3 is no longer the nascent stage of 2017 and 2018. In the US Web3 field, prominent figures can now stand alongside the president. If Web3 or stablecoins are to have better development, compliance is an inevitable and unstoppable trend. 8. Risk Management and Corporate Governance Requirements HKMA not only looks at whether the company has enough money, but also whether it can operate stably and sustainably in the long term. This includes: risk control systems; corporate governance; internal controls; audit mechanisms; technological security; business continuity; compliance personnel; and the suitability of senior management and directors. This also explains why the first batch of stablecoin licenses were more easily granted to JVs related to HSBC and Standard Chartered. These institutions naturally possess bank-level compliance, risk control, audit, and governance systems. While other applicants may also have resources, their banks' influence and regulatory credibility may not be as strong as HSBC or Standard Chartered. If the first batch of licensed stablecoin institutions performs poorly, that wouldn't be the biggest problem. The truly serious issue is that if a major risk event occurs in the first batch of institutions, it will be difficult to issue licenses to subsequent institutions. Therefore, regulators will be extremely cautious with the first batch. 9. Localization Requirements: Substantial Operational Capability in Hong Kong Hong Kong does not want stablecoin issuers to simply operate under a Hong Kong shell. It requires applicants to have substantial business operations, substantial management, and regulatory accessibility in Hong Kong. This includes: a Hong Kong local entity; a Hong Kong team; a local compliance officer; local operational capabilities; direct regulatory access; and key decision-making not being entirely offshore. This is actually unfavorable to offshore Web3 projects. However, it is more advantageous for banks, licensed financial institutions, and payment companies. VII. What impact will the Hong Kong stablecoin system have on the market? 1. Better to do something than nothing. Now that it has an HKMA license, Hong Kong dollar stablecoins can finally legally develop as payment, settlement, and on-chain financial infrastructure. However, the problem is: Global demand for Hong Kong dollar stablecoins is far less than that for US dollar stablecoins. HKD stablecoins are better suited for: local Hong Kong payments; Hong Kong dollar scenarios in cross-border trade settlements; Hong Kong stock, bond, or RWA settlements; on-chain clearing between local Hong Kong financial institutions; and Hong Kong's digital transformation as an international financial center. However, it is unlikely to challenge the market position of USDT or USDC in the short term. This has nothing to do with who makes the Hong Kong dollar stablecoin. This is a systemic limitation. As seen in the HSBC case, doing something is always better than doing nothing. The groundwork laid now is building infrastructure for better future development. Just because it doesn't work now doesn't mean it won't work in the future. What if the US accelerates its decline? 2. Important to RWA Real-world assets, or RWAs, are increasingly sought after globally. If Hong Kong has a compliant stablecoin, RWA's issuance and trading will have an important additional infrastructure. For example: stablecoins can be used for subscriptions; stablecoins can be used for dividends; stablecoins can be used for redemptions; cross-border payments will be more convenient; funds, bonds, and money market products can be more easily tokenized; and on-chain settlements will be smoother. It's important to emphasize here: licensed stablecoins cannot arbitrarily pay interest. Therefore, RWA's returns cannot be simply packaged as &#34;stablecoins automatically generating interest.&#34; The returns should come from the RWA product itself, not from the stablecoin itself. In other words, the stablecoin is a payment and settlement tool, while RWA is the source of returns. This point is crucial for the future design of RWA products in Hong Kong.</p></div></div>

HSBC

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HSBA

STAN

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<p>In late 2023, Hong Kong initiated a consultation on stablecoin regulation, focusing on fiat-backed stablecoins. The HKMA launched a Stablecoin Issuer Sandbox in March 2024, with three potential license holders: JD Coin Chain, Yuanbi Innovation, and a consortium of Standard Chartered Bank, Animoca Brands, and HKT, which ultimately secured the first license. Other interested players, like Ant International, are still in the application process. The regulatory approach emphasizes local capital and familiar business scenarios.</p>

- In late 2023, Hong Kong initiated a consultation on stablecoins, concluding that regulation should start with fiat-backed stablecoins.  
- The HKMA's Stablecoin Issuer Sandbox launched in March 2024, identifying three potential groups for licensing, ultimately granting the first license to Standard Chartered Bank, Animoca Brands, and HKT.  
- By May 2025, the Stablecoin Bill was passed, establishing licensing requirements for issuers, including capital, reserve asset, and operational mandates to ensure compliance and stability in the market.

CoinLive

HSBC HOLDINGS

HSBC Holdings Plc

Standard Chartered PLC

STANCHART

JD.com

JD-SW

XIAOMI-W

Futu

FUTU-W

ZA ONLINE

HASHKEY HLDGS

HKT-SS

JD-SWR

Xiaomi Corporation

XIAOMI-WR

Xiaomi HK SDR 2to1

A comprehensive overview of Hong Kong stablecoin licenses: From sandbox players to HSBC's entry into the market.