On February 4, according to Beijing Business Today, Hong Kong’s stablecoin regulatory framework has entered a substantive implementation phase. HKMA Chief Executive Eddie Yue stated that regulators have received 36 stablecoin issuer license applications, with evaluation work currently accelerating. The authority aims to issue the first batch of stablecoin licenses in March, though approvals will remain highly selective, with only a small number of compliant institutions expected to receive initial licenses.
Regulatory Focus: Risk Management and Cross-Border Compliance
Regulators clarified that licensing reviews will prioritize the overall risk control systems of issuing institutions, including:
- Real-world use cases and business models of stablecoins
- Reserve asset allocation and transparency
- Compliance arrangements for cross-border operations
- If business activities involve Mainland China, Singapore, London, or ASEAN markets, institutions must also meet local regulatory requirements, ensuring multi-jurisdictional compliance.
Industry Outlook: Advancing a Regulated Stablecoin Ecosystem
Industry participants widely believe that the rollout of the first stablecoin licenses will mark a major milestone for Hong Kong’s digital finance sector and may accelerate:
- Development of tokenized assets
- Innovation in cross-border payments and settlements
- Expansion of compliant digital asset financial services
- At the same time, this initiative is expected to further strengthen Hong Kong’s global competitiveness and institutional advantages in digital finance.
“Stability First”: Gradual Progress Under Strict Supervision
Despite strong industry expectations, the HKMA emphasized a strategy of “strict regulation first, gradual optimization later.” Regulators believe that until both market conditions and regulatory frameworks fully mature, a cautious pace is necessary to prevent systemic risks caused by excessive expansion.
Warning Against Illegal Activities and Investment Risks
Regulators also warned the market to remain vigilant against illegal financial activities conducted under the name of “stablecoins.” Industry experts advise investors to avoid unlicensed stablecoin products and to strictly comply with foreign exchange and financial regulations when participating in cross-border stablecoin transactions.
In terms of compliance and risk control, some institutions integrate on-chain risk monitoring and transaction screening tools such as Trustformer KYT to enhance fund flow analysis and suspicious activity detection, improving the security and transparency of the stablecoin ecosystem.
Conclusion
As Hong Kong’s stablecoin regulatory framework continues to take shape, the compliant stablecoin ecosystem is poised to enter a new stage of development. With regulation and innovation advancing in parallel, market participants must strengthen risk management and compliance awareness while seizing emerging opportunities in an evolving digital finance environment.