Hong Kong Set To Approve First Stablecoin Issuer Licenses Starting March

TLDR

Table of Contents

HKMA will issue only a small number of stablecoin issuer licenses in March
Licensing reviews focus on risk controls, AML compliance, and reserve assets
Stablecoins currently represent about a $300 billion global market
Licensed issuers must follow Hong Kong rules for cross-border operations

Hong Kong will begin issuing stablecoin issuer licenses in March, marking a key step in its digital asset framework. The city plans to approve only a limited number of applicants during the initial phase.

The Hong Kong Monetary Authority confirmed the timeline during a legislative meeting on Monday. Officials said the review process is close to completion, with strict assessment standards applied.

Limited Licenses Planned for Initial Phase

Eddie Yue Wai-man, chief executive of the Hong Kong Monetary Authority, said approvals would be limited at first. He told lawmakers that only a “very small number” of licenses would be granted initially.

The regulator aims to ensure that early license holders meet high operational standards. Authorities want to reduce systemic risks while the framework is introduced gradually. The HKMA has been working on the stablecoin regime as global use continues to expand.
Regulators said a controlled rollout allows closer supervision during early stages.

Focus on Risk Management and Asset Backing

Yue said the assessment process focuses heavily on risk management systems. Applicants must demonstrate strong internal controls and governance structures. Anti-money-laundering measures remain a central part of the review process. Issuers must show compliance with Hong Kong’s financial crime prevention rules.

The quality and transparency of stablecoin backing assets are also key criteria. The HKMA requires clear proof that reserves can support stablecoin redemptions. Yue said these standards aim to protect users and maintain market confidence. He added that the review process is now nearing its final stage.

Stablecoins Gain Global Attention

Stablecoins are cryptocurrencies linked to fiat currencies such as the U.S. dollar.
They are used for payments, settlements, and digital asset trading. According to industry data, stablecoins moved about $35 trillion on blockchains last year. The asset class is currently valued at roughly $300 billion.

Citigroup projected that the market could grow to between $1.9 trillion and $4 trillion. Banks increasingly view stablecoins as tools for faster digital trade settlements. Standard Chartered CEO Bill Winters said Hong Kong’s approach could support tokenized money growth. He noted that regulated frameworks may encourage institutional participation.

Cross-Border Rules and Future Coordination

Licensed stablecoin issuers must comply with Hong Kong rules for overseas activities. The HKMA said cross-border compliance will remain a strict requirement. Yue said mutual recognition agreements with other jurisdictions may be explored later. Such arrangements would depend on regulatory alignment and supervisory cooperation.

Officials stressed that March marks only the beginning of the licensing process. Further approvals may follow once the framework proves effective. Hong Kong’s approach reflects a broader push to regulate digital finance cautiously. The city aims to balance innovation with financial stability and regulatory oversight.